Maxing Out Your 401(k) Is A Choice On An Average Income: $55K In DC

The following is a guest post from a 25-year-old Financial Samurai reader who lives in Washington, DC, makes $55,000 a year and maxes out his 401(k). He believes maxing out your 401(k) is a choice on an average income. For those of you who feel like you can't max out your 401(k), maybe this post will inspire you.

After Sam published his article, Achieving Financial Freedom On A Modest Income In Manhattan, I was fascinated to observe some of the no-can-do responses he received from his readers.

Instead of focusing on Sam's message of cutting down housing costs, distracting yourself from spending temptation by working more than the average American, and building extra side income while you are young, the naysayers could not accept that he saved 30% of his $40,000 salary even when he did.

They said people making a similar income in today's dollars would have no chance. Well I make a similar income in today's dollars and I save an even higher percentage.

Maxing Out Your 401(k) Is A Choice

There's a great saying: whether you think you can or you can't, you're right. It seems like no matter how much you demonstrate what's possible, people don't believe in themselves.

The maximum 401(k) contribution limit in 2023 is $22,500. Contribution the maximum should be no problem for single people earning more than $50,000 a year.

I used to be very salty against those who earned more than I did too. My parents didn't pay for college, so I had to work ~15 hours a week during school and 30 hours a week each summer to afford my public school tuition. I also lived at home for the first two years of college as well to save money.

But when I graduated from George Mason University in December 2016, I didn't have any debt. Tuition averaged only about $10,000 a year for my four years there so I handled it like a boss.

I studied accounting, the most boring major in the world. But I knew the chance of getting a decent paying job out of school was high.

I did not have the luxury of studying History or English like my rich private school friends who went to American, George Washington, or Georgetown.

Got A Decent Job Offer

I got two job offers after college, one for $45,000 and the other for $50,000. I took the higher one. It's not like crunching numbers suddenly gets more exciting if you work for a major entertainment company versus an international hotel chain.

Average accounting salary in Washington DC area

Over time, I will make more money as I gain more experience. My ultimate goal is to make $100,000 within 10 years after graduating from college if not sooner. Not unreasonable by any stretch of the imagination.

At the age of 25, I now earn $55,000 a year – 10% higher from when I first started two years ago. $55,000 feels like a healthy amount to me, but I'm a simple guy with simple pleasures.

In 2017 I contributed $18,000 to my 401(k) and in 2018 I contributed $18,500 to my 401(k). For 2021, I plan to max out my 401(k) again with $19,500. $19,000 is equivalent to 38% of my gross income and I don't find the amount a burden.

Instead, I find the idea of working for the next 40 years as an accountant to be the biggest soul-crushing burden of them all! Hence, I save and save some more.

Maxing Out My 401(k) While Earning $55,000 In Washington, DC

Here's my budget for those curious to see how I'm able to have about $40,000 in my 401(k) in only two years.

It's nice that my employer matches up to $3,500 a year. Seeing the money pile up in my 401(k) is addicting and I don't plan to stop.

Maxing out my 401(k) while earning $55,000 in Washington DC

With a $55,000 salary, I earn $2,115 gross every two weeks. Therefore, in order to max out my 401(k), I instructed my firm to take 35% ($740) out of each paycheck for my 401(k) contribution.

My asset allocation split is 90% stocks, 10% bonds. I plan to stay with this asset allocation until my 30s.

With $740 taken out, I'm left with $1,375 in gross income. I've got to pay $70 pre-tax in healthcare premiums, FICA tax of 7.65% (6.2% Social Security + 1.45% Medicare, 12% Federal income tax, and 5% Virginia income tax.

Note: For 2022, the maximum 401(k) contribution limit for an employee is $20,500. It tends to go up by $500-$1,000 every couple of years.

Enough Cash Flow Left Over

When it's all said and done, I'm left with about $1,000 every two weeks to spend how I wish. $1,000 in spending money isn't a lot, but it's enough for me to live a comfortable life. It feels great knowing that even if I spend the entire $1,000, I'm still aggressively saving for retirement.

Also, I'm guessing I'll be getting a ~$3,000 tax refund back given the standard deduction is $12,000 and my taxable income is only $36,000. We shall see. The standard deduction amount is $12,950 per person in 2022.

My job is not exciting, but it's fine. I like the people I work with and I only average 40-45 hours a week. Things will get busier during Feb – April, but overall, the work hours are reasonable.

I get in about 8:30am and leave by 5:30pm for nine months of the year.

Today, seeing the average and median 401(k) balances by generation frightens me. The balances are so low that the numbers also motivate me to keep maxing out my 401(k) contributions.

401(k) balances by generation

Housing Costs ($1,150/month)

I rent a nice three bedroom, two bathroom apartment in Arlington, Virginia with two other roommates for a total of $3,600 a month. The location is great. We have a nice balcony, fancy kitchen appliances we never use, and a small gym with a sauna in our building. Given my room is a little smaller, my share of the rent is $1,100 a month.

My share for cable, internet, and utilities comes to $50 a month, which isn't bad given it's being split three ways. We love to have friends over to watch football and basketball during the weekends. Obviously, we use a friend's Netflix account for free to watch Ozarks (money laundering accountant) and other shows.

When you can share costs with other people, it feels like you're getting great value. One day, I will follow Sam's 30/30/3 home buying rule and buy a house. Then I will rent out a room or two to help get my mortgage paid!

Everything Else ($835/month)

Given I only make about $1,000 each paycheck, you can see how I'm spending almost 100% of each month's salary. But again, that's fine with me because I know that my 401(k) is getting maxed out.

Paying yourself first truly is the best thing ever. As a result, I hardly ever feel guilty about spending any money.

I've got my Metro monthly pass that gets me everywhere I want to go around the city.

I've also budgeted about $1,000 a year to go on a couple weeks of vacation. Nothing fancy, but enough to have a good time.

I don't have a gym membership because I hate being cooped up in a room exercising. Running and biking outside feels so much better. I try and do 150 sit-ups and 60 push-ups every other day as well.

Side Hustling (+$500/month)

Given I only work 40-45 hours a week, I spend another five hours a week on average doing copyediting for a tax and financial website. I can easily bang out a couple hours of work in one evening or do a little bit of work in the morning before heading off to my day job.

They pay me $25 / hour, which comes out to $52,000 a year based on a 40 hour work week.

I use the $500 a month in extra income to build my taxable investment portfolio, which I opened two years ago. I'll be able to contribute at least $6,000 each year in this account while also saving $19,000 in my 401(k) each year.

In 20 years, my after-tax investment account should grow to about $300,000 using a moderate 6.5% annual growth rate and a $6,000 annual contribution rate, giving me the opportunity to do new things if I want.

Given my side hustle income isn't very high, I don't have to pay estimated taxes. My goal is to ultimately generate $10,000 a year in extra income mostly by raising my rate, to save for my future. I strongly feel $300,000 in my after-tax account in 20 years is a conservative estimate.

There are so many ways to make extra income online now, you just have to look. I have the capacity to regularly work 60 hours a week without feeling burned out. I might as well take advantage while I've still got the energy.

Everybody is able to earn some side hustle income if they want to. But not everybody wants money bad enough to do something extra about it.

Financial Freedom On An Average Income

Maxing Out Your 401(k) Is A Choice On An Average Income: $55K In Washington D.C. Case Study

A $55,000 a year salary might not sound like that much to you, especially in the expensive Washington, DC area, but it's plenty enough for me.

Within five years, I'm confident my salary will increase to $70,000+. By then, I will have enough for a down payment on my own place so that I can rent out rooms to other people to help pay my mortgage.

In another five years, I expect my salary to surpass $100,000. If I'm lucky enough to find the love of my life, we'll have an even higher combined salary so we can live alone. I've got to imagine life will be even more affordable as a unit.

Who knows, but with enough dedication, maybe I can grow my side hustle income to $20,000 a year for a combined gross income of $120,000 a year by age 35.

No Excuses For Not Contributing To A 401(k)

I know I'm lucky not to have crushing student loan debt. But I also made a decision to go to my hometown state school while also working on the side. The vast majority of my friends didn't work regularly while in school. Instead, they took vacations during the summers and winters and partied every week.

Be honest with yourself regarding how much you're spending, how much you're saving, and how much you're hustling. If you're coming home each night binging on Netflix or going out to the bars with your friends on a regular basis, you're not maximizing your earnings potential.

Financial freedom is all about making choices. My choice is to have a lot more choices by the time I turn 40. – A Young Samurai In D.C.

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112 thoughts on “Maxing Out Your 401(k) Is A Choice On An Average Income: $55K In DC”

  1. Whenever I’m told I should “max out my 401k” I always wonder if this person knows me, personally. If you have particular goals that that particular strategy supports, great. But what if you have different goals? What if you are putting your money on some other investment approach, that is working really nicely with your 401k/403b/rental income/regular paycheck/additional investments/plus your other ideas/goals?

    Maxing out your 401k pretty much is a choice (even with student debt), but you need an idea of what matters to you and where you want to go, before you immediately go that route.

  2. dollars&zense

    Nice post.

    As someone has reached FIRE, you’re doing all the right things, including sharing with others how to get there.

  3. Mysticaltyger

    I live in the SF Bay Area on a similar income and, until recently, I saved a similar percentage of income. I’m 48 now, and after 22 years of consistent savings (about 15 of them saving 25% or more), I can throttle back a little.

    I wish I had been more focused when I was young like our young Samurai here. I didn’t get serious until I was 26, and I had a few years’ worth of student loans and credit card debt to pay before I could contribute more than a trivial amount to retirement savings.

  4. I know the point of this blog is to encourage good behavior in saving and planning for the future. I also know that if you take care of the little things, the big things take care of themselves. Save a little (or a lot) when you are young and the dividends when you are old can be great. But, at least in my personal experience, I have always been amazed at how little saving in my 20s would have had any real influence on my future in my 30s. I am able to save now in a year what I could save (including with compound interest) in my entire 20s. Personally, I’m glad I spent my 20s attending private school, networking, and blowing all of my money socializing and having fun. The people I met in my 20s are my clients now in many cases (and very good friends). I suppose it is the classic debate between earning income and saving what you make. If I had extra money in my 20s I would invest it in my education and career prospects way before my 401k. Then (if single) going out and having fun next. I would have an emergency fund of course, but maxing my 401k in my 20s, no way. I wouldn’t trade more fun in my 20s for an extra $200k or whatever in my 30s. Ask a 60 year old with $10,000,000 in his 401k what he would pay for one year of his 20s back. One month. One day. One night.

    Look, congrats on being disciplined. That is a skill that will serve you very well in the future. But, it is easy to lose prospective. With the right social skills, and that same dedication you’ve shown, you can make your yearly salary in a month. But, you need exposure to people–lots and lots of people. People that inspire you to do much more than what you currently think you are capable of. People that will help you just because they like you–or because you remind them of themselves when they were your age. For example, my accountant makes around $800k a year. He works hard, but he is hardly the “best” or the “brightest” accountant I’ve ever met. But, I like him (he is a good friend). He is a nice guy and always has my back. Over the last 10 years I’ve probably sent him 100 wealthy clients. None of that would have happened if I never met him because he was watching reruns on TV while maxing his 401k in his 20s. In my experience, going out and meeting people (particularly in your 20s) requires money. Do all the free stuff you can do of course to meet people, but I think it is unrealistic to meet lots of people with $100 a week budget for going out. Real life costs money.

    Also, not to get too sappy and break the internet, but I met my wife in my 20s. She wasn’t the first girl, but she will be the last. It took quite a few bad experiences to even recognize the good ones. Dating costs money. Money that was extremely well spent in my 20s in my view. Way better spent than investing in index funds.

    I know FS talks a lot about his NY experience and living off of $40k a year and maxing his savings. But, if we are all being honest, he is not where he is today because of that. His wealth and his success is a combination of dedication, real life experience, education, and most importantly courage. Having a savings (or safety net of some sort) helped give him the courage to quit his job and start this blog. So it was a factor. But one of many–and not nearly the most important one in my view. Get “obsessed” or “addicted” with squirreling every dime and you will surely fall short of your potential. First and foremost, you must invest in yourself before you can reach for the stars. That’s what FS did. That’s what I did. I would encourage you to do the same. Think much much bigger than you are currently. I get the sense you have much untapped potential. Then, when you are old and boring like us in our 30s and 40s with families, max the hell out of your 401k!

    1. I think it’s more about developing good financial habits early, because much more is at stake once you’re wealthier and have dependents.

      It’s like when I was forced to study 3 hours a night in high school. It carried over into college, and it carried over when I was working. Spending an extra 20-30 hours a week after working 60 hours a week on FS came from childhood discipline.

      Discipline early = discipline later in life.

      1. Agreed. I read in Arnold’s Sc hwarzenegger’s bio that his father’s answer to everything was discipline.

        In college, I was studying 8 hours a day. That work ethic spilled over into grad school, work, investing, and life.

        Starting young increases your dividends in life due time. Once I hit $100k in investments, I was able to relax more because I worked hard enough in my youth to have that money do the heavy lifting for me today.

        I made time for fun. Affordable fun. But I always kept my eye on the prize of FI.

  5. It’s impressive to save that much. I do wonder if it would be possible to retire early (if that’s the goal) without saving much more per year. For example, 20k/year invested for 20 years at a 5% real return would grow to less than $700k. Very good, but not much for early retirement. If you can increase your income, then it could definitely be possible.

    I think some type of investment with leverage, like real estate, is best for young people. Especially if you can find roommates to pay the mortgage.

    Although it really depends on what you want.

  6. I’m really impressed by this guy.

    Young Samurai – I work in Financial Planning & Analysis (FP&A) and it’s been a great career because pretty much all corporations have an FP&A department. Think about this area in case you ever get too bored in Accounting. Look for job titles called Financial Analyst to start out. It still has the month after month, quarter and quarter, year after year cycles like Accounting does, but a bit more interesting. I work at a big company in DC so feel free to reach out if you want to hear more about this career path. I can let you know if anything ever comes up at your level for you to apply to, if it’s a career path that interests you. No offense, but I find accounting to be dreadful. Also, having a combined accounting and FP&A background will set you up nicely in the future for Finance executive positions like VP or CFO.

  7. Great job setting your priorities. I think most people can max out their 401k if they make about that much. When you’re starting out, you have to live a more frugal lifestyle. Having roommates can help a ton. I maxed out my 401k when I was that age and it worked out really well in the long run. Keep at it!

  8. Wow kudos to you! That is an amazing achievemen and takes discipline which you clearly have .ore than most.

    If you were my client though I would urge you to consider not maxing out your 401k but put enough in to get 100% of the match from your Employer then put the balance (or more!) elsewhere.

    Consider this, the larger you grow your 401k the larger your ultimate tax burden. If you hit 71 with a $3m balance what will be your RMD and at what tax rate?

    I would urge you to look at tax-exempt options that would allow you to not have a tax burden when you need the money.

    I would also look for plans with greater flexibility for things like home purchase, kids’ education, business opportunities, etc.

    For most their largest deductions during working years are kids and mortgages both are usually done by retirement so your tax rate goes up.

    The adage about being in a lower tax bracket because you are retired is nonsense and a terrible goal unless it’s because you are living on tax-free dollars.

    1. The issue you ignore is the benefit of tax free compounding. His $3.0M in the 401K when he is 65 might only be $2.0M or probably even less if he paid taxes on it and then had to pay yearly taxes on the dividends and capital gains.

      1. No. If you put say 10% into a ROTH 401k they put 10% in. If you put 10% into a 401k they put 10% in. The difference is your take home check is smaller for the ROTH 401k. What this means is you pay the taxes on the take home amount today but your 401k balance will be the same either way… BUT the ROTH you don’t have to pay taxes on when you retire. So 3M would still be 3M not 2M… vs having 3M that you pay taxes on where you’re probably in higher tax brackets due to inflation plus potentially making more.

        1. 100% agree with Jon.

          Assuming the same growth/tax rates you will end up with the exact same balance whether you go roth and put less in initially or go traditional and put more in but have to pay some of it back to the IRS.

          As indicated in my previous post, the question comes down to this…do you believe you will be in a lower tax bracket when you retire?

          If you do, great! However, that is a huge risk you are taking that is completely out of your control and cannot be mitigated by investment strategies, etc.

          Think of this, many people tell me that they want to be debt free when they retire. To that end they overpay a mortgage sacrificing along the way to pay off something that is fixed, low interest, potentially tax deductible and decreasing.

          Compare that to the lien on your 401k. It is unknown, at a high rate, increasing as the value of your 401k does.

        2. Okay, if the choice is between a 401k or a Roth and for this person I do agree they should do a Roth then I agree with your point. However, once he gets past that Roth limit and just has it in a regular after tax account then it would apply. Granted if he doesn’t make 6 figures the difference between tax free and taxable compounding won’t be as much as if he would be making 6 figures. In DC with his background I am pretty sure he’ll be at higher income levels pretty soon. He may even be over the Roth limit soon.

          1. Matt
            We seem to agree that a Roth is best. Why then does the Gov’t set such low limits on them? Could it be that the Gov’t has their best interest in mind when setting these limits?

            I don’t advocate ANY Gov’t based plan (beyond any Employer match) for those reasons.

            In the case of the Roth low income/contribution limits.

            In the case of non-Roth penalties, RMDs, taxes.

            I would recommend a plan with NO income or contribution limits and tax-exempt growth and distribution.

            This past week I set up a plan for a repeat client who asked if she could put $35,000/yr into a plan for the next 20 years (when she plans to retire). Her income is $500k/yr. No problem.

            IF it performs as I illustrated (6.8% avg growth based on S&P) her $700k will get her $125k/yr tax-free for 15yrs of retirement (her goal) yielding $1,500,000 in return. She can of course take a larger or smaller income.

            One final note…it isn’t the case in the example above but in had she started at a young age (with a much smaller amount) this ONE account could also help with downpayment on a house, kids’ college tuition, business opportunities, major purchases, etc.

      2. Matt

        I am not disagreeing with you about the importance of tax-free compounding my solution would provide the same.

        The difference, and the risk is that in a a 401k type Qualified Plan there is a tax to be paid. The question is do you pay it today, when you know what it is or do you wait 40+ years and pray that it is less?

        That leaves a huge risk in the form of a tax lien against your Retirement that you CANNOT escape! So the question is would you rather pay tax at your current rate (temporarily lowered by the new tax law) based on your deposit OR pay taxes on the withdrawal at whatever rate the IRS/Congress deems appropriate in 40 years?

        I would advocate paying the tax now, eliminating the risk and enjoy the growth.

    1. I agree! If other people don’t have my same expenses, even though they have different circumstances, it can’t be realistic!

      Or, you can just read. Getting ahead is so easy bc so many people can’t read.

      1. Oh of course I’m so dumb, I didnt realize that reading would reduce my cheapest healthcare option from $125 biweekly to just $70 a month. Thank you Andy for your wisdom

        1. And splitting utilities 3 ways?

          He’s a single young person. Health care costs are low.

          Some companies subsidize 100%.

        2. Mysticaltyger

          Just because $125 a month is YOUR employer’s cheapest plan doesn’t mean EVERYONE’s is. Sheesh!

          And really, you’re just nitpicking. The REAL savings for our Young Smaurai are (in order of importance):

          1. Sharing a place (including utilities and cable costs).
          2. Not having a car.

          All the other stuff is trivial by comparison.

  9. Note the lack of student loans… maxing out a 401k makes no sense with student debt right? With so many people saddled with student debt, is it any wonder that people are “behind” with their 401k or retirement account?

  10. Good Job !!

    We had two of our three children when I was in grad school – it seemed like a good idea at the time. It was just me working for a decade and we put the maximum away. It was hard but worth it. When I look at what I have compared to what I contributed – well it is stunning.

    You DO NOT want a life-style demotion when you retire.

    1. Young Samurai

      OK, is that something I just tell my employer to do? Or do I have to open up a new account somewhere? If I contribute $19,000 to a regular 401(k), how much can I contribute to a Roth 401(k)?

      Can you expand on why a Roth 401(k)? Also, can you give me some background about you? Thanks

      1. Your employer should offer a Roth 401k as an option. The contribution limit is the same as the 401k. You can contribute a total of 19k in a Roth 401k and regular 401k.

        If your employer doesn’t offer a Roth 401k you can convert your 401k to an Roth IRA and pay tax when you convert.

        The benefit is you have tax free earnings, so you will pay taxes on everything you put in, but not when you withdrawal. Look up a Roth calculator and you can quickly see the benefit.

      2. I take it back, if it is possible to get your AGI down to a level that maximizes the Saver’s Credit, then regular 401k is better for that, nevermind, I forgot about your side hustle. You already probably make too much, but worth checking out.

        https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-savings-contributions-savers-credit

        Background: FIRE:light :) graduated in 2.5 from in-state public university entirely funded by academic and athletic scholarships, to start working as an actuary, once I passed all my exams and paid off my house I decided I didn’t like the job and didn’t need the income based on my simple tastes so took a part-time gig with the same company to keep health insurance and enough income to max out my 401k. Few years after that I got knocked up and now I’m a SAHM with two children, managing my husband’s retirement funds, we max out his 401k with ROTH contributions and also each have a ROTH IRA we max out. He doesn’t mind his job and the company offers a pension, so he will potentially just stay there until age 55, but who knows.

  11. Good Job Young Samurai! Sounds like you got everything thought out. Very Impressive
    for someone so young. Keep up the good work.

  12. I think many making a modest income do not max out their 401K because of a couple of reasons. For one, they are not thinking about retirement especially when they are in their 20s and thus they probably contribute the minimum(4%?) to their account and forget about it. Also they think it’s not possible to live with the income they have after their 401K contribution. They have to sit down and breakdown their finances to see if it’s possible. If many would do that then more of modest incomers would consider maxing out their 401K contributions.
    Great job on figuring that you can max out yours with your income. You have the right financial mindset.

  13. Personally, I’d go for splitting savings 50/50 between retirement and non-retirement or Roth accounts, so you can get that downpayment faster or other goals before you are 60+

  14. Few issues, is the $70 a month health insurance and $120 a year on soap, shampoo, etc.
    I’m not sure if our friend doesn’t shower daily, but those numbers are low.
    The health insurance cost is absurdly low, there are very few jobs that will cover 80-90% of costs, but good for him
    Also, he doesn’t buy clothes and had no money for incidentals. If he got a $600 hospital bill, he can’t pay it

    1. Some companies have great insurance. Mine contributes more to my HSA than the cost per month to me. For anyone healthy in this situation, you run net-positive for the year with health insurance.

      For the soap…that’s doable. Shampoo, soap, toothpaste…that stuff lasts a long time. I might be closer to $15 myself but I’m not sure.

      He does buy some clothes, at only $300 for the year. Not much to be sure, but I get some nice shirts on ebay for only an average of $28 a pop. And I haven’t purchased a shirt in over a year at this point and don’t plan to for quite a few more.

      With his side hustle he is easily running positive as well at $578 a month.

      Basically, it’s doable. It’s not easy when first looked at but once you start living that way, it really isn’t too difficult. As always, yes, something could derail things. Health, for example, can be fickle, but depending on his health insurance, he may be fine anyway.

    2. I would treat the post as a snapshot in time and not a long term plan.
      Expenses will go up along with salary, although not at the same rate.

      If he is indeed putting all the side hustle into Wealthfront, I would be nervous with only $78 “extra” available.
      A lot of the expenses are not fixed, so a swing in the wrong direction could be trouble.
      i.e. what happens if a roommate moves out ‘abruptly’ (not sure if that’s realistic)?

      What are you using for an emergency fund, if any, the Wealthfront account?

  15. I’m also an accountant and just this past year I maxed my 401k. Before that I prioritized paying my house off. Now I live mortgage free I can afford to Max my 401k, IRA and my husband’s IRA.

  16. Nice job on your savings! I was contributing to a 401k when I made 50k but I wasn’t maxing it out yet. Great job starting early. It will really make a difference as time is on your side when it comes to compounding returns.

  17. Every person is different. I personally would split money between 401k, Roth IRA, and Taxable account (I have a lot higher income as well). I would never put the full amount in a 401k since you cannot touch it (without fines) until you are 59.5. Roth you can take out your contributions and Taxable you can take anything out when ever you want. It just gives you choices especially if you want to retire early.

    Every person is different, but I look at my dad and never want to end up like him. He put all his money in 401k. He was forced out at 57 years old with 2.5 million dollars in 401k. He could not touch any of his “retirement” money and had to live off of zero income for 2.5 years until he could touch his retirement.

    1. Richard Vasquez

      I guess it depends where you work. My 401 K plans allows 2 simultaneous loans at a time. Capped at 50k . So in your father situation he would of been just fine. Not withdrawal, loans in which the interest payed on them will also be his.

      1. Forced retirement meant you had 30 days to move your money out of the company 401k. So he had to move all his retirement to a rollover 401k where loans were frowned upon.

    2. You can absolutely access 401k funds before age 59.5. By using a 72T distribution you can withdraw money penalty free as long as you maintain the same distribution for 5 years. If you dont want to deal with the hassle of maintaining that distribution you can just pay the penalty. Using the 4 percent rule you could pull $100k and you’d still have $90k income after the penalty.

    3. Young Samurai

      OK, good to know. I’ll consider the Roth IRA as my tax rate is low and it has less restriction to pull out if I want to buy a house I think. Thanks!

    4. Mysticaltyger

      A lot of people can take money out of 401ks without penalty at 55, but I think it depends on the plan. Just sayin’.

      But I do think it is important to have other savings outside 401ks, such as Roths, taxable investments, and cash in plain old savings accounts.

  18. I think you’re selling yourself way short on your earning potential if you focus on and manage your career well. You have the financial discipline down, but with that out of the way I would focus everything on growing your income from your career versus further optimizing your expenses or wasting precious time and energy on a $25/hour side hustle. Surely there are things you could be doing with a better ROI than that over the long term. I am not an accountant, but I have a few friends in accounting who have done very well for themselves in the DC area.

    My own personal anecdote, I moved to DC out of college for a $60k/year job at 22 with my now wife with only $6k cash savings and $120k of student loans between us. My wife took about a couple years to get fully established in her career so money was little tight at the beginning as a single earner household in an insanely expensive area. Coming from a working class family in a very depressed area of the country I initially thought I would come down to DC work hard and maybe make $100k in my 40s. I quickly realized that my sights were set way too low once I realized the full income potential of the area and my industry. I took the discipline I had for my personal finances and focused completely on networking, learning, and working circles around my colleagues. Fast forward 8 years, my income has nearly quintupled and with my wife fully established our household income should top $400k this year with a networth >$1M.

    The networth would be hard to duplicate without the epic bull we’ve had since I started investing, but the income potential is definitely out there especially if you find a like minded and driven spouse.

    1. Kyle,

      You’re crushing it. I’m in the DC area, on the cusp of 30 and making ~100k. Taking notes now… :)

      What industry are you in if you don’t mind my asking?

  19. I think it’s great to develop good saving habits st a young age. I got married at 26 and am now 43 with 3 kids. Wife stayed home for 15 years and is now re-entering the workforce. We saved what we could and have a nice nest egg. Could we have saved more? Yes. But life happens. Would be curious to check in with you in 15 years to see how your doing.

  20. Fellow FI-er

    Wow, great work! I applaud your can-do positive attitude, I think we all could use a lot more of what you have.

    I’m in a similar situation to you – I live in Arlington, graduated 2013, and lived very frugally for my first few years to save a good chunk of change. Longtime reader of Financial Samurai as well.

    Your goal of building up your taxable mutual fund is what will give you true freedom – it’s the best goal that I saw from your post. Also, making 100k by 30 won’t hurt that cause either :)
    Good luck, and keep up the great work!

    also, if you want to read my story, check out the link below:
    https://esimoney.com/esi-scale-interview-7/

  21. Mr. Hobo Millionaire

    You’re killing it. Congrats on being a doer, and not a whiner. Living with roommates is a big key to your success. I tell people this all the time, but receive back mostly whining and “that’s not possible” kind of replies. Great job!

  22. I don’t understand the anti-private school sentiment, considering how big a difference there is between the sticker price and the price you end up paying after available scholarships and financial aid. I’m in a similar financial boat as the poster, but a few years older: maxing out retirement accounts, after-tax savings/investing, saving a huge chunk of my income, etc. I also went to one of the schools he mentioned specifically, have seen the liberal arts portion of that education pay huge dividends already in my career…and ended up paying about the same out of pocket after financial aid.

    I’m all for making smart financial decisions but the recent theme that going to a private school is a bad thing is confusing to me. Yea, I had a good number of classmates whose family names were on buildings and I first learned that “summer” could be a verb during my freshman year, but the majority of my classmates were “regular” non-entitled people who were able to get an affordable education because of the financial aid available (scholarships, loans, and work study), maximize their future earning potential with a great education, and weren’t the entitled pricks that FS seems to think private school graduates are.

    I 100% agree that if the choice is between taking out exorbitant loans to go to a private school versus going to a way more affordable public school, the smarter choice is the public school. I’ve advised family and friends of this and have seen different people make different decisions who now have to live with the consequences (some good, some bad). But as a dude who grew up solidly middle class and was able, through hard work and some luck, to attend a great private school at an affordable cost, that investment was totally worth it and has paid so many dividends already in the 6+ years since I’ve graduate. Consider this my attempt at a reasoned “not all private schools and people who attend them are bad” counter argument.

    1. It’s just the way society has turned against wealthy people who went to private school. With the growing wealth gap, people are frustrated. It’s good to recognize this truth and not stay in a bubble.

      What kind of dividends did your private school provide over a public school you think? And what do you do for a living?

      1. I can’t necessarily compare its apples to apples because I only experienced the one, but to be able to attend Georgetown for ~$40k out of pocket for the whole experience was too good of a deal to pass up. I spent 4 years in the nation’s capital with world class faculty and really smart and ambitious peers (for the most part)—both of whom set the bar high and maintained it. You couldn’t get away with not showing up prepared for a class on international trade theory when your professor was a former assistant deputy commerce secretary and a handful of your classmates are interning at various govt agencies and ready to tear your argument to shreds if you just spout some BS. Plus all the speakers we were able to host on campus whenever those types came to visit DC, as well as all the other opportunities being in that city offered. I’m not sure I could put a price tag on the iron sharpens iron thing. The alumni network opens a lot of doors too, but while it gives you a foot in the door, you still have to live up to it. It’s the same as anywhere else—if someone vouches for you and you burn them by not living up to expectations, you’re not getting a second chance. I can understand the gripe that folks may have about even getting such an opportunity in the first place, but getting into a pretty exclusive school and graduating is a pretty good heuristic that someone has some baseline of competency—and we humans love heuristics.

        I don’t think it’s impossible to find something similar at a public school, but I don’t really look at it as public vs private so much as a case by case thing. Both of my siblings (against my advice) ended up going to small private schools to get degrees that didn’t offer a good ROI and are now living with student debt they didn’t need to take on, while friends who went to public school had a much smoother transition to working adult life with zero student loans. I ended up joining the military as an officer. Technically, you only need a Bachelor’s degree to be accepted, but the only 3 people selected from the board to which I applied were from Georgetown, Yale, and Harvard, so I have to think it came in handy there.

        1. Sounds good to me.

          What I really take away from your comment is that it depends on the individual.

          And given that’s the conclusion, a college’s name isn’t as important as some think it is. As you gain more experience, you’ll realize where you went has almost zero importance.

          Best of luck!

    2. Young Samurai

      Honestly, I’m just envious they get to study luxury majors, in my opinion, because I don’t feel the pressure to get a job or earn enough money to pay for college tuition.

      So many of my well if your classmates had parents pay $4000 for Princeton Review SAT courses and stuff like that. We could never afford it so I just tried to do what I could myself.

      But, I’m happy with the way things have turned out and it gives me a lot of motivation to make it on my own.

      1. I don’t buy the “luxury major” argument. Ok, maybe if it was basket weaving or aboriginal music or something like that, but the idea that a History, English, Philosophy, Government, etc. major is a luxury major is a weak argument, in my opinion. About a year or so ago, there was a wave of articles coming out about how Silicon Valley was finally realizing the benefits of the Liberal Arts types as people who could bring to the table skills that they were finding many of their engineering grad types seemed to struggle with: how new technology fit into the bigger fabric of society (see Facebook’s recent issues), how to manage and lead teams, how to communicate effectively, etc. We’re seeing all across the globe a “new” wave of political situations that looks eerily similar to conditions in the early 20th century—it’s probably worth studying how things ended up then, identifying what responses did and didn’t work, and determining how we can best apply those lessons to today and avoid mistakes of the past. Look at all the high level leaders who have taken to the lessons of Stoicism to see the benefits of philosophy.

        Sure, there are some majors that have a straighter line between graduation and a first job, but you’ll reach a point where your technical ability only gets you so far and you have to demonstrate the ability to bring to bear other skills—skills that those other disciplines of study help develop. To this day, there are a few of my business operations courses that have helped me massively in my career, namely some in decision support systems and operations management. But I can way more easily point to many more liberal arts courses (that, admittedly, I wasn’t so stoked about taking at the time) I was required to take that helped shape my thinking, perspective, and approach and have helped me reach a level I wouldn’t have otherwise been able to reach.

        You seem to be doing fine and this is no way an argument against that. I know what it’s like to work a job during the school year and a full 40 plus odd jobs on the side during breaks. I’m just suggesting that you don’t completely discount those “luxury” majors. The things you can learn from them (both in and out of school) can pay off big time, especially as a differentiator when so many other people choose to ignore them.

        1. Young Samurai

          Fair. What did you major in and what is it that you exactly do in the military?

          I think it might be hard for a very smart (scholarship) or wealthy people to understand the sacrifices poor people make to spend money and four years of their time to go to college.

          It’s like gambling to me, where I need to help ensure that my time and my family’s money was worth it.

          I figured I can always picot later after I save up enough money.

          Secure my finances first, and then take more risk. I think that makes sense.

          1. I majored in business operations and information management and minored in theology. My school was a liberal arts university, which meant we were, regardless of major, also required us to take at least two courses in history, economics, government, literature, psychology/sociology, and theology. Again, I’m not knocking the path you’ve chosen at all. I’m just pushing back on the broad brush idea that private schools and non-technical majors are inherently bad. From what I’ve seen, it’s typically more a matter of the individual case study (re: going to private vs. public school) and the individual itself. I had plenty of accounting major friends who struggled to find jobs out of college and plenty of English major friends who found great ones. Unless you’re pursuing a job that requires a specific certification or studying something waaaaaaay out there, I think the bigger determinant of success is the individual, which FS has highlighted in his own story.

  23. Little Seeds of Wealth

    I lived in the DC area until a few years ago and I agree this can be done. I did slightly differently than you on a 45k starting salary (rising to 60k eventually). I didn’t max out my 401k because I wanted to be able to pay for grad school with my savings and finish with no debt!

    I would highlight the fact that you save a lot by not having a car. Too many people keep their cars around in metro areas when they only drive once per week or less. There’s no way having a car can be cheaper than $100/month like in your spreadsheet.

    Keep up the good work!

  24. Very impressive. I have to show this post to my kids. I didn’t start aggressively saving until the age of 29. You have a great head start.

  25. Mary Oserhoff

    I love that he said saving is addictive. I found that to be true. With images of Scrooge mcDuck in mind, I budgeted and planned, and drove old cars. I am now retired comfortably and just returned from two months in Costa Rica to my paid off house.

  26. Cool, it’s definitely do-able and sounds like you have a good plan! But why are you contributing to an after tax brokerage account before an IRA? (Or really, why max your 401k before maxing your IRA, especially given fee levels of a lot of company 401k plans and that your income level qualifies you for the tradIRA deduction)

    1. Young Samurai

      Good point. I guess I want to hedge a little bit and have some liquid investments that are not subject to any penalties.

      Can I use my IRA contributions to buy a property down the road? I know I can borrow from my 401(k) as a first time homebuyer and just pay myself back.

      I think when I make more money, I’ll feel more comfortable contributing the $6000 to an IRA. But maybe I should start now!

      1. Mysticaltyger

        If you contribute to a Roth IRA, you can take the contributions (but not the growth) out at any time without any penalties. You really should be contributing to a Roth ASAP.

  27. Average home price in DC is over 500k for a 1600 sqf home. in Arlington it’s probably on the high end. You think you’ll have 100k or more saved for a down payment to afford a house big enough to rent out rooms? Everyone reading this look up Arlington VA homes for sale…good luck with that.

  28. I was one of the kids who commented on Sam’s recent post of “Latest 401(k) Balance by Age…” and I was denying the fact that you should put so much into a 401(k) at a young age. I am also 25 and working in Accounting but am in LA. I started in mid-2016 @ $50k and now am ~30% higher. The end-point of my discussion was, if you want to purchase a property and rent out a couple of units to other people for side-income, why wouldn’t you make that your first priority?

    You have the self-discipline to save money, so you understand what it takes. Putting cash into a 401(k) where it is locked up is like telling a snail to cross a side-walk. It’ll eventually get to its destination, but how long will it take? Based on your income and your future projected income, it will take you quite some time before you can build up the proper down-payment. Being that you need 25-30% (Based on Sam’s recent post) to comfortably purchase a house, I would ask yourself how long that will take you if you aggressively save to a 401(k). Unless you plan on tapping into your 401(k) to do so, but if that’s the case, why would you even put money into the 401(k) when you can just have the cash?

    1. Young Samurai

      Because I’m not sure if I want to be in the Washington DC area for the next 10 years. But I do know for sure that I want to minimize my tax liability and the easiest way to do that and save for my retirement is to maximize my 401(k).

      I like to be as free as possible now. And ideally, I’d like to find a serious gf first. I think my desire to buy a property with them go up. And so would our combined income and wealth.

      1. That does make sense if you don’t know if you’ll stay in DC. However, I think real estate would provide a much higher return if you’re willing to live in a house with roommates.

        1. Hawaii FIRE

          You have to do the math whether buying real estate makes sense. In some cases it might or in others it might not. Check out Paula Pant’s blog and podcast where she often addresses this topic in great detail. If the stock market averages 7% over 20 years and your real estate investments average 7%, but there have a lot of other expenses that aren’t normally taken into account (maintenance, HOA/Condo fees, RE taxes, agent commissions, etc.) then it might not be the best choice when you take into consideration all of the other things that go into being a property owner. Additionally, there are ways to access to your 401(k) well before 59 1/2. The Roth Conversion Ladder being one of them.

          Check out Mad Fientist’s blog post on that topic: madfientist.com/how-to-access-retirement-funds-early/. Again, it’s all situation specific but contributing into your 401(k) is something everyone should do regardless of whether you own property or not.

  29. I greatly respect his discipline, but I also struggle with some of his trade offs. I think it takes a certain person to be content living this way. While I comfortably max out my 401k, HSA etc. at 28 yo, at this time of my life (single, w/o kids, etc.) their are certain things I can do that once I settle down with a family I will not be able to. For that reason, I am okay with saving a little less to enjoy more traveling and one-off experiences. I also have met some of my closest friends at the gym (intelligent, hardworking, like-minded individuals) so forgoing a gym membership would be very far down on my list.

    Coming from an accounting background as well, I would also recommend not selling yourself short on your earnings potential! Someone as disciplined as yourself, there is no reason it will take you 10 years to earn $100K, especially in a city like DC.

    Ultimately, I don’t want to sound like I am bashing in any manner. I am genuinely impressed by the discipline outlined above, I just don’t think the financial trade offs outweigh forgoing certain experiences in your 20s.

    1. Young Samurai

      Thanks! I just don’t like being indoors at the gym that’s all. I like just running and biking outdoors and inhaling the fresh air.

      I hope my income grows faster than my expectations. But I’m just trying to keep them moderate so I can surprise myself on the upside :-)

      1. If you are interested in accelerating your income as an accounting professional, a few options come to mind:

        1) Job-hopping will usually provide you with an immediate pay-bump. If the new job is a match for you and your potential employer, don’t accept less than 15-20% in a hot job market. 10% in a cool one.

        2) The Big 4 has very steep income increases for top performers. In 10 years you can start at $60k as an associate and get yourself up to $200k+. The job can be demanding but you are often exposed to very interesting work (if that matters to you). If you like the job enough, making partner usually happens in years 11 thru 14 and the first-year partner pay is usually around 350k-450k depending on firm, role, and geography.

        3) Another hack for accountants — Consider finding a small investment fund to work at as a controller. Hedge funds, fund-of-funds, and private equity funds all need dedicated and experienced accountants. As a matter of industry policy, the year-end cash bonuses usually range between 25% to 200% of your salary. And the base salaries aren’t usually bad either! The big cahuna in the DC area is The Carlyle Group but there are others. NYC has so many smaller funds you could work at.

        I have a buddy who majored in accounting in college, never did Big 4, started out as an accountant at a cruise line, but then after 6 months made the jump to a fund-of-fund and never looked back. He ended up staying in for about 12 years and making 6-figures in almost every single year (due to healthy bonuses) with almost $300k per year in his final couple of years.

  30. Awesome sauce man! What a great example of sensible living, avoiding lifestyle inflation, and thinking about your future. You’re proving it can be done. I live in the DC area and know how expensive it is.

    And BTW the average income in America (household) is now over $70,000. The median household income is about $60,000. You are still below those, living in an expensive area, and crushing it – MAJOR kudos!

  31. Great real life post! I have a question as my daughter is at an expensive private school majoring in Finance & Econ. Do you regret majoring in Accounting? Based on your comment about “soul crushing burden”. I am trying to “encourage” my daughter to major in Accounting so she will get a job. You are right…there are kids majoring in “hobbies and passions”….we were not going to pay for a hobby. If you had to do it all over again, would you have majored in something different and enjoyed your career more? Maybe you would have made less money but you would be happier?

    1. I know it’s unsolicited, but there are interesting applications for mundane skills. My uncle did accounting, had experience in risk management, and ended up writing corporate insurance contracts for more money than I can fathom. I went to an aviation school where they offer business degrees taught by people from aerospace industry, so that mundane universal MBA suddenly qualifies you to work in management at Boeing or Lockheed Martin, especially if your classmates are engineers and your group projects revolve around those areas.

      College is what you make it. I got a mechanical engineering degree, but interned at airlines, tailored my projects to my interests, and participated in extracurricular projects that gave me experience. It resulted in an interesting career so far.

    2. I would stick with the finance and econ (but then I am an economics prof). She can train on the job and do accounting qualifications later. At least that’s how big accounting firms recruiting grads used to work.

    3. Young Samurai

      I only say soul crushing If I have to do this job for 40 years. But I don’t mind being an accountant for the next 10 to 20 years. Maybe I’ll move into the business side of things and on my own accounting practice. I don’t know.

      I just knew that I wanted to save money for college and get a practical degrees so I could ensure that I have a decent paying job upon graduation. I don’t have too much to fall back on and I don’t want to be a burden to my parents.

      George Mason is close to my parents house and really is good value. I will probably entertain other interests on the side after work.

      1. Thank you! You have a great head on your shoulders. You will do fine. Don’t overthink things too much- enjoy your relationships and have some fun! (I’m in my 50’s & worked way too hard in my 20’s).

  32. Simple Money Man

    Awesome! I wish I had this dedication when I left college. Your passive income will also be higher at 35 due to Dividend reinvestment as well. Keep it up. I live in the DMV area as well and it is possible – all about choices and consistency!

  33. I went and looked at my budget when I first started working out of school 17 years ago and I spent about $25 K a year on a salary of $51 K. After taxes, I and putting away 15% into a 401(k) and $3,000 into an IRA, I had about $400/month in extra cash to save. I was living in South Florida and even though I never felt rich, I never felt like I was poor and struggling. That savings has paved the way to getting me only a few years away from early retirement as I’m approaching 40.

  34. i started reading this and was a little confused. who exactly is the author? a reader, or another blogger??

      1. I’m Mark. I actually stumbled across your site many years ago and by pure accident was able to get an email across to you directly (you had forgotten to put an out-of-office reply back in 2016 or 2017). I’m an engineer by education but by work I deal with finance (trading, investments, etc.) This is probably the one and only blog that references alternative investments, and that is what peaks my curiosity. Investing automatically (Vanguard, Fidelity, Janus, etc. is easy). It’s the alternative income that is rather difficult to obtain unless you have lots of capital. I found an adviser that is able to get into funds that do what you do (rentals, etc). The only downside is that unless you have about $5 million you can’t invest in the fund. It’s an interesting discussion, but it isn’t really for a forum such as here. I’m more than happy to email you or post my thoughts in another location. Sorry to ramble, life has been busy recently. P.S. I’m from VA and it’s nice to see someone from my home state blogging and doing very well for himself.

  35. Grumps Labastard

    But aren’t ERISA plans a trap? Especially when you look at the exploding deficits sure to come and that’s not even accounting for the unfunded liabilities owed to the Boomers.

    What do you think is going to happen to that big fat pile of tax-deferred assets with a cash hungry gubermint? When one uses a 401k there’s kind of a lien on those funds. Sure the rules now in place stipulate only paying income tax on accrued gains, but what if the rules are changed for the sake of national security?

    1. You are confused between a Roth and a regular 401k. With a regular 401k all withdrawals are fully taxable, since contributions were made before taxes. With a Roth, contributions are made after taxes, and gains are (currently) tax free, so no taxes are owed on withdrawals.

      Looking back over my 29 year career, I wish I had maxed out my 401k, contributed to a Roth IRA, AND had an after tax brokerage account at Vanguard. Oh well, that’s life. Thankfully, I had a very generous pension which I took in a five year period certain payout, the majority of which has been invested in a rollover IRA earning sufficient passive income (dividends and capital gains) to help support our lavish retirement lifestyle. I just hate paying taxes on those withdrawals. LOL

      1. It’s the Roth that scares me the most. I can definitely see the rules being changed regarding Roths. At first it might manifest as an incentive to roll withdrawals into Treasuries to keep from paying tax, but these Treasuries will have a negative real yield.

        For regular 401ks the rules could be jiggered from income tax to capital gain tax specific to ERISA plans. This could be 25, 30% whatever they like. Or you can avoid the tax by putting the withdrawal into Treasuries.

        Or the gubermint could just seize ERISA assets and in exchange everybody gets a UBI stipend and coupons for gubermint cheeze.

        I mean, we are going to have 2-3 T deficits soon. It’s why Modern Monetary Theory trial balloons are being floated left, right and center.

  36. There are a lot of things you have done right in the very beginning of adulthood that will set you up for financial success later on.

    The fact that you stayed at home to cut expenses and attend a less expensive college likely saved you 6 figures compared to someone who went to private school and had to borrow his or her way through the 4 years.

    Also sharing expenses by taking on roomates is a wise decision early on before you marry, etc. Of course everyone wants to get a place of their own but there is a financial cost to doing that.

    By doing stuff that other people might find undesirable will allow you to have a desired lifestyle later on when they are chained to the workforce to pay for their current luxuries.

    Great job and kudos on surviving in one of the most expensive cities in the US and still being able to max out your 401k.

    1. Young Samurai

      Thank you! I’m truly enjoying living with roommates because were younger and it allows us to go out together and explore the area together. It’s like having a posse.

      But we’ve got to be careful not to go out too much and spent too much money. Having home parties as fun and easy to do.

  37. I love the grit of putting the 401k as your first priority and going from there. Automating those max contributions and never seeing them make setting your cost of living so much better. I do the same with mine and I haven’t noticed a difference in lifestyle- but maybe my wife and I are more frugal than most. We emphasize saving now in order to let compounding do the heavy lifting.

    One question for you: I work for a regulated electric and gas utility in the middle south and I see you list $25 as your monthly utility amount. I assume you split that three ways with your roommates, so $75/month on average. I’ll tell you, that’s truly remarkable.

    New Orleans, where I live, is a comparable city in most regards with D.C. and the Pepco electric utility. Regulators in both cities routinely compare the two to each other.

    Our average monthly bills are higher than $75/mo and we have a similar housing stock: fully a third of our city lives in apartments or condos. Pepco, an electric only utility, had 2017 bills average $80/mo. When you add gas and water into your utilities budget, it surely must go higher, no? I imagine gas alone would be $60-100/mo given the climate? Perhaps the water bill is covered by the rent?

    I don’t mean to quiver over such a small amount of your budget, so please don’t take it that way.
    Just as a utility guy, I’m prone to look at that portion of a budget first and it jumped out at me. Would you mind commenting a bit on that line item?

    1. Recovering Engineer

      Not sure about DC but in NYC many apartment buildings include gas/water in your rent. So your only “utilities” spending is electricity. That could explain the low number.

      1. That might explain it. I figured the water might get buried in the rent, but hadn’t come across that for gas bills in New Orleans.

        Based on my experience, when I was in grad school in PA, we didn’t have that arrangement. All of our utilities were separated from the rent. But if it’s common practice, my question can die on the vine. Thanks for providing some added insight.

        It makes the $1,100 in rent figure even more appealing if that covers gas and water. Especially if it’s a really nice place like the author mentions.

  38. I also agree that it can be done. My first full year out of school I made 53K gross with 115K in student loans. I paid off almost 28K that year also living in the same area (Alexandria, VA). 12 years later, in 2018, my household income was just under 200K with a savings rate of 54% (of gross). No debt remaining except $150K on the mortgage on a $450K house (aiming to pay off in 3 years), retirement savings of 400K, and a year+ worth of living expenses saved up for any emergencies. Most simply lack the will to even begin trying.

    1. Young Samurai

      That is a great income surge with not a lot of dead. Thank you for sharing. Gives me hope to make more money overtime. How did you manage to make so much more money?

      1. Young Samurai,
        You should consider working for a Big 4. Your income would increase substantially.

          1. Not very well in audit and tax compliance. Not worth it at all for the hours you work. It can vary by office but here in Phoenix starting out you are making less than 60k a year and working 80-90 hours a week in busy season. More like 40 hours a week the rest of the year. Internal audit consulting works 45 hours a week year round and makes 5-10k more a year. Other consulting lines of business can pay much more for more like 60 hours a week.

          2. Accountant here… also second Big 4 comment, with caveat. In SF it starts around $60k. In other cities, it probably ranges $50-60k. You will work a lot, there is no way around it. Obviously, there are jobs that are less pay/fewer hours like the one one Young Samurai has. The key is to have an exit strategy.

            I worked in Big 4 for a few years- it was a love/hate relationship. However, I was able to use my experience to get a great job now (100k+, great benefits and hours, plus equity). I hated Big 4 at the time, but feel that it was all worth it considering how things turned out.

            Congrats Young Samurai! Accounting is really a great major in terms of cost/benefit. Keep at it!

            1. Yeah, that is how most people feel about auditing in the Big 4. Me included. Great experience. I’ve worked now 22 years so those 3 years make up a small portion of that time.

  39. My personal “no-can-do” stance wasn’t that it’s impossible, but that it’s discouraging to people who aren’t a few years out of college.

    Imagine you’re a social worker who will ever see a max salary of 40K. You’re just going to have no car, kids, and roommates your entire life? Neat.

    P.S. I’ve personally maxed my 401K every year of my working life.

    1. This website isn’t exactly for social workers…. It definitely can be, but that’s not the typical reader wanting to maximize their income and minimize their expenses….

      1. I’m a social worker making 60k a year with 3 about to be 4 dependants. My wife stays at home. We bought a home with a daylight basement we converted it to an ADU. I’m able to save a 3rd of my income thanks be to God for that. So if you get a social work degree and find the right job it can be done. PS the area I live isn’t cheap either. Hope for the best and write goals down.

        1. Thanks for letting me know. Learn something new every day. 300k taxpayer funded social worker… wow!

    2. Anyone can do it. I’ve been saving 35%+ for 20 years starting right outa college, through many many different jobs, and I maintained a side hustle for the first 11 of those years. Maxed out 401k plus a Roth IRA plus plenty of cash which I invested very wisely and took a ride on the 2009-2019 longest bull market in history. Now I’m way way way loaded, house paid off, cars paid off ( their each 10yrs old) enough Roth IRA and 529 money to easily pay the kids college and I literally have more money left over than I know what to do with. We’re in the top 25% income bracket today but the top 3% of wealth. I’m not even that bright, just really determined and stubborn. Anyone can get rich as long as you’re starting at 0 and have 20-30 years

    3. Mysticaltyger

      I have a friend who was a social worker for the federal government in the SF Bay Area. She made over 100k. The ones making 40k tend to live in lower cost areas.

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