Anonymous User wrote:Someone asked above what I meant when I said that lawyers do well, but not fantastically.
I mean that I think that the majority of big law partners never crack $1m.
That may sound like a fuck ton of money, let's say you have 1 kid and wish to live in ny, so that your commute is shorter and you can see your family:
A decent 2bdr apartment is, min, 2 mil and you need to pay 50 percent down or more to satisfy board rules at many coops.
So say you have a 1 million mortgage. Your savings are crushed by the 1 million down payment.
That means you're spending about $80k a year on your mortgage alone.
But in an apartment, you also have to pay your condo fee or maintenance fee, depending on if you're in a condoner coop. For a 2bdr, this will be around $1500 a month. Include utilities, and there goes another $20k a year.
Next, school. $35k for private, once you factor in all the various costs. Public would be great, but better pray your kid is smart enough for Hunter or, eventually, Stuy.
Now, let's consider retirement. Here the tax considerations get tricky, but we can make a stab at it. You're going to need to maintain your standard of living when you retire and most firms require you to withdraw from the partnership when you hit 65. That's going to require a TON of money. So you need to be saving 200k a year, and that probably understates it. And remember, no employer match and most of that is taxable income.
But wait, there's more! Do you know how much a good ppo health insurance plan costs? Try $750 a month or so.
Now let's just consider where we are so far. We haven't paid for food, or any vacations, or clothes, or any entertainment. Nor life insurance, fire insurance. We haven't considered the cost of a car, which is theoretically optional in new York but the kind of thing you'd figure a "rich" person can afford. Want your nice Audi A6? Be ready to drop well in excess of $1000 a month for insurance, lease payment, and parking.
And here's the kicker. You live in NYC, so your tax rate, aggregating state, city, and federal, is 50 percent. So for the 350k or so in expenses I just mentioned above? You've got to earn 700k to make that work. Leaving 200k for all the fun stuff, except you've got a kid who eats up a chunk of that, meaning....that as a partner making 900k in NY, your disposable income isn't that much higher than, say, a single 5th year associate.
And thee aren't too many ways out of this corundrum. Your wife wants to work? Great, but drop another 50k in child care expenses. Live in the suburbs to save on tax and housing cost and school? Well, you're going to lose 60min with your wife and kids each day, which wouldn't matter except that you work till 730 and young kids go to bed around 9 and the marginal cost of the 30 min in the evening is huge.
Now, you're definitely not poor. You're sending your kids to top schools. You have a beautiful home and a nice car. If you really want something, you can have almost anything. But you're not rich, not by NY standards when there are literally thousands of people making multiples of your salary. You're at the very very very top end of the upper middle class.
glanced over all of that sort of anecdotal stuff (which i tend to mentally discount anyways
there's a lot of conflicting data out there on this, BUT -- recent US census data puts top 2% median HOUSEHOLD income at $250k...meaning a lawyer that doesnt crack $1m but who is still well above $250k is already in the top 2% of earners in the US
that seemed a bit low to me and i saw a lot of conflicting evidence...so i always wondered about that one...and an even better study was done that did the breakdown by city
it had a column for top 20% and top 5%, taking into account city dynamics -- i vaguely remember Manhattan being the most expensive (no surprise here)...yet for a household of 4, the household income would "only" need to be around $750k (from what i remember) to be in the top 5%. of Manhattan. probably >5% if you take into account the rest of the country.
im pretty sure, by most (even subjective) standards, top 5-2% is closer to doing 'fantastically' than simply doing 'well'