Annual Household Income

[jwright]

Mar 6, 2021 12:58:03 GMT -5 froggy76 said:

Mar 5, 2021 11:49:08 GMT -5 jwright said:

I'm on of the ones who responded with a high income.  Most of it is from investments, not wages.  I suspect that is true for others as well. 

Mine is wages and I have done a poor job investing. I'm curious how you got to this point where most of your income is from investments? Did it just build up that way gradually over time?

Working on a response to this that won't reveal too many identifying details (although I probably already have in other posts). 

[heygrey]

I have family that would be in the $500k hhi range with dual incomes. I’m not sure exactly what their jobs are now, I think they are more into management, but they both started out in marketing for a large company and have had a had several promotions since then. (They work at the same company.)

Yes they make a lot, but they also hire a small team of people to run their home too because they work so much. They have a live in nanny who does some household stuff, but they also have a house keeper, lawn person, etc.

[chpmnk1015]

I have friends and family who make over 500k a year... i live outsude nyc and the area im in had a lot of wall street, nyc lawyers, professional athletes and tv personality... in this area its definitely not uncommon...

[bee20]

In the Seattle area HHI >500k is two 30-something tech workers and isn't super uncommon. Bachelors degree and 10-15 years of work experience gets you there. You could also have one in tech middle management, typically a bachelors plus MBA although you can swing it with only a bachelors in some cases.  (Alas, that is not how I answered this poll).

[goldengirlz]

Mar 6, 2021 21:48:33 GMT -5 Accountingcat said:

I'm gonna need one of the 27 posters that make over $500k to chime in and tell me how.

Like I just don't get it. My HHI income is relatively high (HCOL, business owner+ a decent occupation) but even I'm not sure how to hit $500k.

Per this article: money.cnn.com/calculator/pf/income-rank/index.html
HHI over $200k = top 6% in US
over $250k = 4%
over $350k = 2%
over $450k = 1%

A lot of people who make these very high salaries don’t do it on base pay alone. There are often lucrative bonuses or equity. For example, when I joined my company, my RSUs were only supposed to add an extra $35k/year to my total comp, but our share price has quadrupled since then and now they’re vesting at a value that’s worth about $130k/year. And I’m only in a mid-level position. I’m certain I have coworkers at higher levels (and who’ve been at the company longer) who are bringing home $200k or more per year just in equity. This is VERY common in my industry (tech.)

If you look at CEO pay, it’s the same concept. Their base salaries aren’t THAT crazy — it’s everything else that adds up to those $45 million payouts.

[ohgillian]

Mar 7, 2021 13:18:03 GMT -5 goldengirlz said:

Mar 6, 2021 21:48:33 GMT -5 Accountingcat said:

I'm gonna need one of the 27 posters that make over $500k to chime in and tell me how.

Like I just don't get it. My HHI income is relatively high (HCOL, business owner+ a decent occupation) but even I'm not sure how to hit $500k.

Per this article: money.cnn.com/calculator/pf/income-rank/index.html
HHI over $200k = top 6% in US
over $250k = 4%
over $350k = 2%
over $450k = 1%

A lot of people who make these very high salaries don’t do it on base pay alone. There are often lucrative bonuses or equity. For example, when I joined my company, my RSUs were only supposed to add an extra $35k/year to my total comp, but our share price has quadrupled since then and now they’re vesting at a value that’s worth about $130k/year. And I’m only in a mid-level position. I’m certain I have coworkers at higher levels (and who’ve been at the company longer) who are getting $200k or more just in equity. This is VERY common in my industry (tech.)

If you look at CEO pay, it’s the same concept. Their base salaries aren’t THAT crazy — it’s everything else that adds up to those $45 million payouts.

This is helpful. Since H and I are both in government, and always have been, things like this are hard for me to conceptualize. I mean we're paid well for government (both over $100k), but things like you're describing are a world I don't know anything about. 

[goldengirlz]

Mar 7, 2021 13:46:57 GMT -5 ohgillian said:

Mar 7, 2021 13:18:03 GMT -5 goldengirlz said:

A lot of people who make these very high salaries don’t do it on base pay alone. There are often lucrative bonuses or equity. For example, when I joined my company, my RSUs were only supposed to add an extra $35k/year to my total comp, but our share price has quadrupled since then and now they’re vesting at a value that’s worth about $130k/year. And I’m only in a mid-level position. I’m certain I have coworkers at higher levels (and who’ve been at the company longer) who are getting $200k or more just in equity. This is VERY common in my industry (tech.)

If you look at CEO pay, it’s the same concept. Their base salaries aren’t THAT crazy — it’s everything else that adds up to those $45 million payouts.

This is helpful. Since H and I are both in government, and always have been, things like this are hard for me to conceptualize. I mean we're paid well for government (both over $100k), but things like you're describing are a world I don't know anything about. 

It was really eye-opening for me when I took this job. I knew people in certain industries made a lot of money, but I wasn’t totally clear on how.

But I do think it’s important to understand how the rich make money when these discussions come up on CEP. Sometimes we’re arguing over something that seems “unfair” — like someone making more on Covid-related unemployment than they were while working — and it’s like, you don’t even know what a windfall the 1% has gotten this year from the government’s economic policies.

[ellipses84]

Our income had drastic swings from month to month in 2020-2021, but overall, we are so lucky to have a higher income from 2019. After months of UE for me / Furlough/ low hours for DH, I started consulting with a steady gig. Then I got offered another job which I agreed to take on part time. It was TBD how long the consulting gig would last and I at least expected the hours to drop after a few months. The part-time job wants to hire me full time when I’m available, which helps my peace of mind for job security. I’ve been working crazy hours, which I thought would last 2-3 months but it’s continued at this pace for 6 month! The money is great though and WFH makes the hours more bearable. Since I didn’t have anything to lose with either one, I was more gutsy than normal in my negotiations so the pay is great!

[dontlook]

Mar 7, 2021 13:18:03 GMT -5 goldengirlz said:

Mar 6, 2021 21:48:33 GMT -5 Accountingcat said:

I'm gonna need one of the 27 posters that make over $500k to chime in and tell me how.

Like I just don't get it. My HHI income is relatively high (HCOL, business owner+ a decent occupation) but even I'm not sure how to hit $500k.

Per this article: money.cnn.com/calculator/pf/income-rank/index.html
HHI over $200k = top 6% in US
over $250k = 4%
over $350k = 2%
over $450k = 1%

A lot of people who make these very high salaries don’t do it on base pay alone. There are often lucrative bonuses or equity. For example, when I joined my company, my RSUs were only supposed to add an extra $35k/year to my total comp, but our share price has quadrupled since then and now they’re vesting at a value that’s worth about $130k/year. And I’m only in a mid-level position. I’m certain I have coworkers at higher levels (and who’ve been at the company longer) who are bringing home $200k or more per year just in equity. This is VERY common in my industry (tech.)

If you look at CEO pay, it’s the same concept. Their base salaries aren’t THAT crazy — it’s everything else that adds up to those $45 million payouts.

H is in the bonus territory and it has been eye opening for me. He makes around $120k and his bonus is 10-15%. His boss above him makes easily 20-25% bonus plus his base is higher. Two levels above him get a 40-50% bonus. In 2 promotions he could be making $175k base and get a 40-50% minimum. Now if you have 2 people doing that it could quickly make $500k. I don’t work so we aren’t in that situation but I can see it.

[icedcoffee]

I went into the wrong line of work. 😂

I’m a CPA so the earning potential is there it’s just taking a long effing time to get there. There is a huge gap between senior leadership and exec team. It’s frustrating. Also, I work in the non profit space but I’m struggling to get out having been there for over 12 years.

I mean...I do fine but I was promised these huge salaries as a student if I passed the damn CPA exam. LOL

[keweenawlove]

A co-worker has a friend who was the CFO of a major corporation. He had a competing offer and company A offered for a $500k retention bonus. I got into the wrong line of work.

[ohgillian]

Mar 8, 2021 8:28:43 GMT -5 keweenawlove said:

A co-worker has a friend who was the CFO of a major corporation. He had a competing offer and company A offered for a $500k retention bonus. I got into the wrong line of work.

In contrast: About a year ago, my office* decided that wireless mice were now standard, so they starting buying the mice batteries for us. Before that we had to bring in our own AA batteries. (And our own mice but that was a given.) LOLOL /sob

* ETA: government

[sicilygirl]

Another CPA here, who is constantly looking at other people's financial situations. I see three groups of people who routinely make above $500k.

1. Small business owners
2. Those who work for (mostly tech) companies that pay their employees partly in equity.
3. People whose income is coming from investments. If they're older, it's often just years of dedicated saving (the millionaire next door type). If they're younger, it's usually from real estate.

[ohgillian]

Mar 8, 2021 12:17:56 GMT -5 sicilygirl said:

Another CPA here, who is constantly looking at other people's financial situations. I see three groups of people who routinely make above $500k.

1. Small business owners
2. Those who work for (mostly tech) companies that pay their employees partly in equity.
www.etsy.com/listing/886716164/pomegranate-painting-original-art-oil3. People whose income is coming from investments. If they're older, it's often just years of dedicated saving (the millionaire next door type). If they're younger, it's usually from real estate.

Thanks for chiming in. Is this like income-producing real estate, such as they are a residential or commercial landlord? Or are you referring more to buying and selling? Or both? 

[dr.girlfriend]

Mar 6, 2021 9:22:55 GMT -5 lilypad1126 said:

I’m always amazed at how much money some people/families make! And then I remember that my H basically doesn’t work, and most people my age are in a 2 full time income family. My H is a older than me and has tapered off his consulting work over the last 4 years, but we are trying not to touch his investments just yet, so it’s really just my income that’s being reported. And, until literally this month, I’ve worked in higher Ed where raises are limited. I’ll be interested to see how my income changes with my new job that has a bonus structure and the potential for real salary growth.

I think it can really vary too over the course of your life.  I'm in a job where increases are usually capped at 3%.  When I first got the job I calculated out that it would take me 19 years to reach six figures at that rate.

BUT, starting salaries have really gone up over the years, so the point where "equity adjustments" have tripled my salary in the past 17 years.  They need to offer a competitive salary to get a new person in, and then that new person with zero years of experience can't be paid more than the existing people with many years of experience, so fortunately everyone gets bumped up. 

I know I was definitely way underpaid at first, but it's pretty mind-boggling to compare my salary then to now.  And this was definitely NOT the case for the first decade I worked here, we really had to advocate for salary adjustments by arguing that people getting hired straight out of postdoc were making more than we were after 10 years of practice.

[sicilygirl]

Mar 8, 2021 12:59:33 GMT -5 ohgillian said:

Mar 8, 2021 12:17:56 GMT -5 sicilygirl said:

Another CPA here, who is constantly looking at other people's financial situations. I see three groups of people who routinely make above $500k.

1. Small business owners
2. Those who work for (mostly tech) companies that pay their employees partly in equity.
www.etsy.com/listing/886716164/pomegranate-painting-original-art-oil3. People whose income is coming from investments. If they're older, it's often just years of dedicated saving (the millionaire next door type). If they're younger, it's usually from real estate.

Thanks for chiming in. Is this like income-producing real estate, such as they are a residential or commercial landlord? Or are you referring more to buying and selling? Or both? 

I would say that owning real estate and renting it out, unless you are doing it on a very large scale, is better for long-term wealth building because of the increase in the value of the properties over time.  It is less conducive to actually providing you with income to live off of in the present time.  Once you pay off a mortgage, then the income can become more meaningful as well.

Development is where you will see people bringing in actual income now.

I used to live & work in Houston/central Texas and am now in Southern California.  The general theory holds true, in my experience, in both places.

[jwright]

Mar 8, 2021 13:27:37 GMT -5 sicilygirl said:

Mar 8, 2021 12:59:33 GMT -5 ohgillian said:

Thanks for chiming in. Is this like income-producing real estate, such as they are a residential or commercial landlord? Or are you referring more to buying and selling? Or both? 

I would say that owning real estate and renting it out, unless you are doing it on a very large scale, is better for long-term wealth building because of the increase in the value of the properties over time.  It is less conducive to actually providing you with income to live off of in the present time.  Once you pay off a mortgage, then the income can become more meaningful as well.

Development is where you will see people bringing in actual income now.

I used to live & work in Houston/central Texas and am now in Southern California.  The general theory holds true, in my experience, in both places.

As I said upthread, this agrees with my experience as well.  Leveraging low interest debt to buy and hold real estate for the long term is a common way to build wealth.  

[konapoppy]

Mar 8, 2021 13:36:27 GMT -5 jwright said:

Mar 8, 2021 13:27:37 GMT -5 sicilygirl said:

I would say that owning real estate and renting it out, unless you are doing it on a very large scale, is better for long-term wealth building because of the increase in the value of the properties over time.  It is less conducive to actually providing you with income to live off of in the present time.  Once you pay off a mortgage, then the income can become more meaningful as well.

Development is where you will see people bringing in actual income now.

I used to live & work in Houston/central Texas and am now in Southern California.  The general theory holds true, in my experience, in both places.

As I said upthread, this agrees with my experience as well.  Leveraging low interest debt to buy and hold real estate for the long term is a common way to build wealth.  

A Common way to build wealth for people who haven’t been systemically oppressed from real estate ownership.

I was just listening to The Big Payback - a podcast on reparations- and it covers this more.

[Covergirl82]

Mar 6, 2021 22:52:34 GMT -5 RockNVoll said:

Mar 6, 2021 21:48:33 GMT -5 Accountingcat said:

I'm gonna need one of the 27 posters that make over $500k to chime in and tell me how.

Some professions/industries I'm familiar with that pay very, very well:

• Strategy consulting
  
• Investment banking
  
• Private equity
  
• Hedge funds
• Certain physicians/surgeons, particularly at senior levels
• Big Law
• Mid- to senior-level executives at successful companies
• Lots of random private companies run as family/lifestyle businesses
  

If you're a dual-income household and both hold down jobs like these, you could easily be over $500k.  You also probably work a lot.

As a compensation analyst by profession, I can tell you that the bolded reflects execs at the company I work for (global consumer goods) who are eligible for our cash long-term incentive program.  A VP could make a base salary of $300,000, have a target annual incentive of $105,000 (35%), and a target long-term incentive of $120,000 (40% target; we have three-year cycles, but 3-year cycles begin each year, so we have a payout each year), for a total of $525,000.  I'm in a MCOL area, for reference.

When I worked for a hospital/healthcare system (same metro area I'm in now) (I left in early 2020), some of our specialist physicians made above $500k (e.g.,. orthopedics, orthopedic surgery, transplant, neurosurgery).  In terms of execs, the CEO and their direct reports would typically make above $500k in base + annual incentive.  (There was a long-term incentive for that group of execs, but it the 3-year cycles were not concurrent/overlapping, so payouts only occurred once every 3 years.)

I would also add commission-based jobs.  A mom I know is a popular real estate agent / realtor in my area and has sold some big-ticket properties (high 5 and low 6-figures), so it's very possible some years she could make $500k+.  (And her husband is in pharmaceutical sales, so I would bet a lot of years they easily make $500k+ together.)

[Cappy]

Mar 7, 2021 10:13:48 GMT -5 jwright said:

Mar 6, 2021 12:58:03 GMT -5 froggy76 said:

Mine is wages and I have done a poor job investing. I'm curious how you got to this point where most of your income is from investments? Did it just build up that way gradually over time?

Working on a response to this that won't reveal too many identifying details (although I probably already have in other posts). 

Thank you for being willing to share.  

Reading this as a "bottom feeder" income wise it is deflating to feel like I'm just always going to be here (66k) bc I don't see any realistic pathway to anything else. That said, if there's some knowledge I can impart to my kids as they grow and explore their future I'd love to learn and pass it on. 

[irishbride2]

I won’t go into detail, but it’s part family money, and a part h started his own firm that does well.

[boiler717]

I would say most of the dual-HCP couples I know are in the $300-600k range.
We are on the bottom end of that, both pharmacists. My husband is a university professor (low pay for a pharmacist); I make about 2x his income in the pharmaceutical industry. I feel very fortunate that we both work in healthcare but have extremely flexible and family-friendly jobs.

[tcu2003]

PDQ

My H and I are both engineers, and both at the same medium-to-large sized consulting company, so pay is generally lower than you’d see in oil & gas, aerospace, manufacturing, etc. That said, our annual HHI was in the $200-250 range last year and will should bump up to the next bracket this year, though I don’t expect much movement past that, or at least anytime soon. My DH is around the $100k Mark, maybe $110k with bonus. I was promoted to the shareholder level, so got a significant salary for increase this year which will also come with increased bonuses, so we’ll see what that looks like.

[kellytaylor]

PDQ

[jwright]

Mar 8, 2021 17:09:06 GMT -5 Cappy said:

Mar 7, 2021 10:13:48 GMT -5 jwright said:

Working on a response to this that won't reveal too many identifying details (although I probably already have in other posts). 

Thank you for being willing to share.  

Reading this as a "bottom feeder" income wise it is deflating to feel like I'm just always going to be here (66k) bc I don't see any realistic pathway to anything else. That said, if there's some knowledge I can impart to my kids as they grow and explore their future I'd love to learn and pass it on. 

For the first time ever Proboards ate my post!  Probably because I had it open so long trying to not dox myself. 

I had a head start in getting in the investment mindset.  My dad owned a small business, and bought the building out of which it operated.  He's been savvy with stocks and later with angel investing/lending.  He's had a key investment advisor that has put him and now my brother and me in contact with opportunities that we wouldn't ordinarily encounter.  For example, I have structured debt in my portfolio  that has performed well and I probably wouldn't be exposed to that if not for this advisor relationship.  

I started my career in public accounting and worked for "the guy" in my area for high net worth individuals.  As I mentioned upthread, I prepared and later managed returns for families with six, seven and eight figure income.  Meeting those types and their advisors helped build a solid network early on.  We would walk through the main thoroughfares in Charleston and point out all the buildings owned by clients.  Around my mid-twenties I joined an investment group that provided mezzanine financing to a condo-development in downtown Charleston sourced by a client contact.  Since then I've used savings, inheritance, and profits from that deal to invest in other real estate deals.  In 2013, I went to work for a real estate developer and met other developers, capital groups and investors.  Under that umbrella I invested in two development deals.  

Another avenue that I was just recently introduced to is the "search fund".  My advisor connected me with two investors that had purchased a business via a search fund and wanted a CPA to join their next team. I have not yet committed to this, but am interested in continuing the conversation www.gsb.stanford.edu/faculty-research/centers-initiatives/ces/research/search-funds

I don't know how helpful any of this is.  I'm coming from a place of privilege for sure; my family provided financial security and a solid education.  It was complete luck that I landed in a job where I could learn from the inside (by studying tax returns and client financials); I answered an ad in the newspaper to first get that position.  It takes development deals a long time to materialize so you have to have the ability to be patient.

[ohgillian]

I really appreciate everyone that has been willing to share your industries and income and where that income comes from. There are a lot of PDQs so instead of tagging folks, I'm just making a general post. Thanks! I think that threads like this help me understand the whole economy better -- I'm mainly familiar with my industry, so there's so much I don't know.

[jinkies]

This is so fascinating to me and I appreciate everyone who has shared their income. H and I are doing so much better than our parents, but still on the low end of the spectrum of the poll. Some of these incomes are just beyond my imagination in terms of how I would ever get there.

Like, I appreciate jwright's detailed explanation but I still don't fully understand it. Lol.

I would love to set my kids up to be savvier, but how would I even do that if I don't understand it myself? I do intend to really encourage my kids to think about earning potential of any potential career path. I was a first gen college student and my parents told me major didn't matter so I picked something lower paying. I do think sometimes that if I had just had a little help choosing a major I'd be in such a different position today.

[ohgillian]

Mar 9, 2021 17:15:26 GMT -5 jinkies said:

This is so fascinating to me and I appreciate everyone who has shared their income. H and I are doing so much better than our parents, but still on the low end of the spectrum of the poll. Some of these incomes are just beyond my imagination in terms of how I would ever get there.

Like, I appreciate jwright 's detailed explanation but I still don't fully understand it. Lol.

I would love to set my kids up to be savvier, but how would I even do that if I don't understand it myself? I do intend to really encourage my kids to think about earning potential of any potential career path. I was a first gen college student and my parents told me major didn't matter so I picked something lower paying. I do think sometimes that if I had just had a little help choosing a major I'd be in such a different position today.

Combined, we're in the 200 range PDQ, so that's where I'm coming from with this comment. My number one financial goal for my children is teaching them that one should never spend everything that comes in*. They are 8 and 10, and I talk about this a LOT with them. Like every time i have an unexpected expense, I point out to them how much it cost, and that we're paying for it with money we earned before right this minute, that we saved. 

I mean, there's a LOT more that they could learn and be way savvier than me; like i have no idea what most of jwright said meant. But if they don't learn from me that they can't spend every cent that they get, none of the other stuff is going to matter. I don't know if that helps or not. I'd love to hear how other people are approaching their children's financial literacy. (Maybe an s/o thread?)




* Obviously this doesn't apply to families living in poverty, at the margin, etc. 

[Velar Fricative]

I appreciate the info here! I admit I’ve always been curious too since DH and I have been primarily in the public sector for our careers. Stock options, incentives, bonuses - I either have no idea what they are or have never gotten them.

But, we do quite well in our sector, IMO. In a normal year, we earn about $250k (18 years in his field, 14 in mine). It was slightly less in 2020 since DH couldn’t teach summer school or do much of what he normally does to earn some extra money (coverages, after school center, etc.). And we will both get nice pensions and other benefits after retirement and that is what keeps us in the public sector and keeps us in our city.

[ohgillian]

Mar 9, 2021 18:20:25 GMT -5 Velar Fricative said:

I appreciate the info here! I admit I’ve always been curious too since DH and I have been primarily in the public sector for our careers. Stock options, incentives, bonuses - I either have no idea what they are or have never gotten them.

But, we do quite well in our sector, IMO. In a normal year, we earn about $250k (18 years in his field, 14 in mine). It was slightly less in 2020 since DH couldn’t teach summer school or do much of what he normally does to earn some extra money (coverages, after school center, etc.). And we will both get nice pensions and other benefits after retirement and that is what keeps us in the public sector and keeps us in our city.

Yes, this is true for us too. We will have retiree health insurance (first to bridge the gap til Medicare, and then to serve as our supplemental & rx policy) and we both have defined benefit pensions. At one point DH was considering leaving the pension system and our vanguard advisor told him that to net even, he'd need a job where he could contribute an additional $57,000 annually to retirement to make up for leaving the pension. (Spoiler: he stayed in the system.) So that's a factor for sure that keeps us in the public sector and that doesn't show up in our compensation now.