6 figure individual incomes in Southern California

[(former)FormerSanDiegan]

We all question the Federal govt’s numbers on inflation, GDP, and others as potentially cooked, but cannot see the flaws in the way savings rate is computed.

The official numbers have some deficiencies. They don’t count capital gains, and they don’t count contributions to retirement plans.

I have been saving about 25% of my salary (before taxes) to retirement accounts over the last decade. What a shame. I have been contributing the this nation’s decreasing savings rate problem. I apologize to all. To help out, I should probably eliminate my retirement contributions and take that money after tax and stuff it into a taxable account. At least that way the savings will “count”. Of course, that will cost me over $10K in additional taxes per year, but hey, that helps the budget deficit.

I think the government should sponsor an edumacation program that encourages after tax savings as opposed to the tax-deferred investment vehicles in which people are throwing away an opportunity to improve their savings rate. This would improve the nations savings rate.

Also, I think it’s entirely appropriate that the Government ignores Capital gains when computing the savings rate. That $3 Trillion in capital gains per year from the stock market really doesn’t matter, does it ? That’s only about a fourth of our country’s GDP, right ?

As for 401K balances being insignificant at an average of 50K … that comes to about $50 Billion per million accounts. If we assume that there are about 50 million 401K accounts that’s about $2.5 Trillion. Yeah, that’s small potatoes. I’m sure that nobody ever changes jobs and rolls their 401K into IRAs either. So lets ignore any IRA balances or even contributions as savings.

How much are you saving ?

[surveyor]

tax impact on savings

FSD:

totally agree, I would rather feed my Roth IRA and 401k instead of my savings because of the tax impact. Besides, there are ways to get money out of those two if you’re in enough trouble.

[CAwireman]

Responses:

Kev: most of those I know in the 25 – 35 range are either level-headed or have parents with $$. And, this can’t be the norm, so my info isn’t much help there.

Yooklid: Congrats on being younger and making big bucks. I am actually comtemplating an involuntary job change. If you aren’t opposed, can say way industry you are in? I’d love to know.

lbjames: If I was younger and not married, I’d like to live in PD too. I almost moved there with a female friend about 4 years ago before meeting someone else and tying the knot.

Josh: On dating ugly. I, er, um. Good luck with that strategy….. Why should you expect more if you are attractive- its part of Darwin’s survival of the fittest bascially. Nothing more and nothing less.

Davelj: I think that women may feel comfy living beyond their means because either parents or the perspective hubby may materialize to bail them out, at least temporarily. I agree. Comfort with leverage is rampant.

G2006: Yep, dual income, or dual income no kids helps out a lot. The common/high divorce rates do much to contribute to NOD and RE sales (I estimate).

SD R: In addition to 401K, family expense, please add the new tax burden for those making over $100K (I forget the term).

Concho – Yep, a good offense is a good defense! Don’t surf from a computer upon which you do your finances! Try to keep your finance computer off the internet if at all possible. Always good to have non-routable IP addresses on all your internal computers. If you don’t know about good IP security – LEARN!

PS – As Warren Buffett said, you don’t know who’s swimming naked until the tide goes out. What a great quote!

As for me and the missuz, we have no dept and combined income is over $150K ( at least for the time being…) The group we hang with, ages 35 – 55, professionals who are good savers or have had homes for 5 – 7 plus years. We don’t live large. I think the younger crowd either drank the cool aid, or doesn’t care, or maybe has no hope and is thus taking all they can get – whilst the gettin is good.

[Anonymous]

I think history shows that the US in general is becoming an ever more voracious consumer. While some of us might exist within circles where most people we know are intelligent and financially savvy, I don’t see this as the norm. Just look at the commercials on TV – buy this TV, it’ll make you feel good; buy this car and you can be like a rockstar.

When I think of that report that came out that stated that around 30% of people don’t even know what kind of mortgage they have, that’s what I think of as the average American. How did we react to our last recession? We sure as heck didn’t save money. We took advantage of easy money and bought even more stuff we don’t need.

I totally believe that we have a negative savings rate. Even if people tap their retirement funds for added money, sooner or later that has to end too.

[blahblahblah]

I agree with Andy, PS, and others — the consumption hamster wheel is spinning faster and faster and Joe Sixpack’s little legs are working harder and harder to keep up. I followed that link PS posted, which is interesting and informative, but check out the author’s blog which has posts from many CPAs and CFPs from around the country.

My guess is that birds of a feather flock together – most of the folks on this board are financially responsible and thus have financially responsible friends so we don’t see the real situation like the CFPs and CPAs would. My mom worked at a bank in the 90s processing loan apps and she always told me that I would be shocked if I could see how bad most people’s financial situations really were.

[recordsclerk]

My co-workers and I earn about 30K a year, so we are nowhere near the 100k mark, but I can give some insight on how the lower income live/spend. I will start with the single people 25-35 years old. Most of them don’t have any savings. Most of them have some form of debt. Some drive cars that cost more then their annual salary. Most of them have no desire to save for the future or buy a home. With this income it’s very hard to save money or invest. Most of them live check to check. The few that are good with money, tend to work overtime when available and drive modest cars. The ones that are more in debt refuse to work overtime and are more concerned about what’s on sale at the mall. In my 17 years working here, there’s only been one person that bought a condo on their own.
For the married people between ages 25-35 with a spouse of the same income:
They are either saving for a house or already own one. Some have been saving for 5 years or longer and are in worse shape affordability wise then when they started. Most do not have any savings or investments. A few are still living check to check and in debt.

[partypup]

I work at a tevelevisionnetwork, make 240K/year with a 80K bonus. I drive a 2006 Jetta (diesel, 500 miles/tank) and have 5K credit card debt (0.5 % interest until balance is paid in full). I sold my home as soon as I could find a buyer, have 500K in the bank and starting next month I will be renting. I figure I can save 6K/month this way. My goal is to never buy another piece of property in this country. I hope to retire in New Zealand or South Africa after I have amassed $1M and buy a small, comfortable house and write. I am 40, have tried many careers, so I started saving a little later than I should have, but I think I’m still on track to realize my goals.

[blahblahblah]

Heads up Vitaly — looks like partypup is a prime port-scanning target. Hell man, with a salary like that he won’t even notice if you ACH $80K or so out of one of his accounts.

partypup, I hope you are behind a good firewall or Vitaly from Kiev is gonna buy himself a nice little Black Sea villa with some of that dough you’re so proud of.

[masayako]

People do save in America. They “save” money through captial gain. I am one of them. Before tax (Roth-IRA, 401K) and after tax account.

My point is: One of the largest saver, Bill Gates, worth more than $50 Billions dollars. According to gov’t saving rate, Bill never saved much of anything his whole life. The only thing he may have saved, according to saving rate data, is part of the dividends MSFT paid out of his $600,000 a year salary (according Microsoft’s proxy statement). The bulk of his $50 billion he never saved. He got to be the richest guy in the world by not ever “saving” What he did was to start a firm and plow back profits and cash flow into future growth (which most of us think of as saving!), but from gov’t point of view, there’s no official saving.

I’m poor compare to Bill Gates, of course. From gov’t saving rate data, I never saved much either – because I took a small salary (low 6 figure)and much of that money plowed back into my start-up company, before-tax and after-tax saving account. America actually save A LOT and may have the world’s highest real saving rate, but because it’s almost all aimed at capital again, it never shows up in the gov’t whacky saving rate. The media will never explain this to you because it doesn’t make a ‘good’ bad story. We all know bad story sell better than good story.

My point is:
From an average joe’s point of view, I am probably rich. But from the gov’t statistic point of view, I’m just a loser with negative saving rate.

Got me point? Hope the idea come through.

Masayako

[cr]

Well I haven’t read every post on here, so I’ll address the original post, which means I am probably just repeating what has already been said.

I think most of agree that not all, but a majority of the brand new BMW’s, Merceds, Yellow H2’s, and so on and so on, were bought with what I call fake money; money from a re-fi, or HELOC.

I honestly believe income levels are nowhere near what they appear to be. Even if you look at the NAR statistics, I think CA was mid $60K average income. LA, SF, and SD, yes, but the rest of the state? No way. We’re talking average here, and I’d bet the average is higher because we have so many celebrities and athletes in our state. Think about how many actors there are; tons of them live here in LA.

The (fake) money came form the real estate bubble. It made instant faux millionaires out of common homeowners. We know incomes didn’t triple like house prices did.

The scary thing is how much came from the real estate bubble. Everything from brokers and realtors, to plumbers, carpenters, and even companies that supply refrigerators, copper pipe, grantie counter tops, and so on.

We hear bits and pieces of these, but I think it’s going to get a lot worse as people shy more and more away from housing.

Watch out for those spillover effects, and others like increasing used luxury cars and SUV’s for sale.

[Anonymous]

“So the household income for is roughly a quarter million annually. These families are – dare I say – common in some of San Diego’s suburbs. Keep in mind San Diego is unusual and not typical in this respect.”

Analysis:
1,000,000 – Total households in San Diego County
x 9% – Percent that make over $150,000/year
———-
= 90,000 Families who make $150,000+/year

Carlsbad
Households 33,000
Households 150k+ 4,000, 12%

Encinitas
Households 25000
Households 150k+ 3,500, 14%

Conclusion: 10-15% does not qualify as ‘common’ and if you narrow it to those who make $250k as you stated you’re probably looking at less than 5% of families in the well to do suburbs of Carlsbad and Encinitas who earn that much. Perhaps less than 2,000 families in those two cities if I were to guess. Add a 1,000 for those who sheild their income and you have 3,000.

[greekfire]

Masayako-
I now see what you are trying to say. Thanks for the clarification.

[startingout]

Maybe it’s because of where I live (Inland Empire), or my age (25) but most of my friends would fall between $30K and $60K…I won’t state my personal income, but it’s in that range.

And maybe it’s because people with higher incomes tend to be more interested in a site like Piggington, but it seems like most people here are raking in the dough (at least compared to me).

So here’s how the other half lives, guys: most people I know, 25-35, with or without kids, have a credit card with a couple thousand bucks on it, two car loans (most pretty modest cars, with loans being in the $15,000 range), and just saving what’s left in the meager hope that maybe someday you’ll be able to afford a home so you don’t have to raise kids in an apartment. How do we make ends meet? Shop at Costco, buy clothes at Target or even WalMart, try not to eat out too often, cutting back everywhere you can. There are people in that age range that are going around in designer everything, expensive cars, etc., but they are deep, deep, depp in debt and haven’t even begun to think of the future.

I think for a lot of you it might feel like most people make over $100 K, and for you and your friends it’s probably true- but when you look at society as a whole, I think you’ll find that a $100K+ salary is not the norm.

[no_such_reality]

The information you want is in the American Fact Finder surveys conducted by the census bereau yearly.

Select by principle city, then the MSA (metro-stat-area)

Table C19001 provide household income breakdown. Here is Ontario and Temecula

You can see that Ontario only has about 10% of the households making over $100K, Temecula has about 25%.

Table B19037 provides the same household income information broken down by age groups. It’s the second table in the above link.

[cr]

Nice Chart NSR.

Temecula has roughly 38% of it’s population making $35-75K, and roughly 35% making $75K-150K.

Ontario has about about the same making $35-75K, and about 26% making $75K-150K.

The difference is more than I would ahve expected, because Ontario has it’s fair share of industry too. But regardless of how accurate these numbers are, my question is how much of these incomes are from industries directly related to housing?

Realtors, Brokers, but also people on the construction side all raked in the money in the glory days, and are probably starting to struggle. The LA times had couple articles this week on former loan officers looking for new jobs.

I’d expect these to all go down.

[Author]

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