American Dream Cost: Family of Four Now Struggles on $230,000 a Year
By April Fowell
- A family of four in the San Francisco Bay Area needs an annual income of over $230,000 to live comfortably, according to a former Goldman Sachs analyst.
- Sam Dogen, who retired at 34 and amassed a $3 million fortune, reveals in a Financial Samurai article that his yearly spending is projected to exceed $288,000 in 2024, requiring an income of around $420,000 before taxes.
- Dogen's breakdown includes substantial costs like $80,400 for private grade school tuition, $26,000 for food, and a staggering $68,400 for housing (including insurance, maintenance, and property taxes). Despite facing financial challenges, he emphasizes prudent investments and savings in light of continuous inflation.
According to a former Goldman Sachs analyst, a family of four must make more than $230,000 annually to live comfortably in the San Francisco Bay Area of California.
Sam Dogen, 46, gained notoriety in 2012 after retiring at age 34 and amassing a $3 million fortune.
Ever since, the father of two, who is also the author of the best-selling book "Buy This, Not That: How To Spend Your Way To Wealth And Freedom," has been subsisting on the interest generated by stocks, bonds, and real estate.
However, Dogen disclosed that he just took a big loss on his money to buy a house for his young family in struggling but still expensive San Francisco in an open new article on his website, Financial Samurai.
The financial guru now projects that his yearly spending would exceed $288,000 in 2024, but his investments will only earn $230,000 before taxes. Dogen calculated that, before taxes, he would need to make around $420,000 a year in order to get that amount.
Declaring that he was "not asking for sympathy or empathy," Dogen readily acknowledged that he and his spouse lead a firmly upper-middle-class lifestyle.
He did, however, break out his projected yearly costs, stating that they would be on pace with those of other two-parent, two-child households residing in equally pricey areas, such as New York City.
Financial Realities of Living in High-Cost Areas
Dogen budgets $80,400 a year for his two children's private grade school tuition and $24,000 for medical expenses.
He predicts that this year's food costs would exceed $26,000, while housing costs-which include insurance, maintenance, and property taxes-will total an astounding $68,400.
"My spouse and I are self-employed, thus we are responsible for paying the $2300 monthly rates for unsubsidized healthcare insurance on our own," Dogen said.
The finance expert commented, "The good thing about living in San Francisco is that there are so many career and money-making opportunities... There's just too much excitement to leave to a lower cost area of the country to try to save money at the moment," in reference to the city's absurdly high real estate prices.
The increasing number of Americans who are finding it difficult to keep up with the skyrocketing expenses of groceries, rent, and utilities will be alarmed by Dogen's financial breakdown.
After more than ten years of retirement, the former analyst-who also held an executive director position at Credit Suisse and an MBA from the University of California, Berkeley-says he is now considering returning to the workforce or consulting.
As to Forbes, the mean yearly income of an employed American is presently $59,428. The amount is somewhat more in Dogen's California, at $73,220.
According to a new Investopedia research, "owning a home, a car, a pet, and sending two children to school" is considered living the American Dream, and it requires an average US resident to earn an astounding $3,455,305 over the course of their lifetime.
However, the analysis indicates that the average American, regardless of education level, only makes about $2.3 million.
Dogen's best financial advice, despite continuous inflation, is to make prudent investments and attempt to save as much as you can.
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