Having lived in Berlin for ten years, I can say with certainty that wages there are less than half equivalents in our industry in the US, and income taxes are much higher. Cost of living in some places, like Berlin, is lower (for now), but that only matters if you intend to be a low income earner over your career. I would rather have 50% higher expenses and 100-300% higher income, myself.
There’s more to lifelong financial planning than “can I afford house payments?”.
I lived in the Bay Area for almost a decade until around 2005, the Presidio in San Francisco was my last address. I had a choice to stay - but I decided to go back to Germany. Wonderful city (for the most part), wonderful landscape, great climate, and I'll forever miss it - but different people have different priorities. I (still) don't really care where I live, but Europe (most of it) is hard to beat as an overall package deal. When you are young you don't care about much that you do care about in your forties or later.
About high incomes: What's the point of high income when you have to use it to buy things you otherwise get as part of the package anyway - or, more frequently, that no money can buy because the society as a whole has to provide it (includes the soft stuff like political climate and how much some arts of the population think they have to protect themselves from other parts)? I understand and accept when different people choose differently, but if there is only a single argument, a single data point "my income" then I see a lack of vision (almost literally).
> What's the point of high income when you have to use it to buy things you otherwise get as part of the package anyway
it doesn't just cancel out though. software devs in the states make much more money, to the point where you can easily afford the things that the government would provide you in europe. plus you obviously have to pay for those things through taxes anyway, and guess who pays the lions share of that. if you are in a high income bracket, you are always going to pay more in than you get back in direct services.
So what you're saying is... trains in SF... are a wreckage, and unusable. And you use a hyper-capitialized burning-someone-else's-money "disruptive" "startup" and would like to pretend it's comparable to having a functioning social service.
Well, okay.
I also regularly uber around in SF. Because there's no alternative. And yet: even ignoring dollar cost, I'd say it's comically, pathetically slow to get around the city compared to what a functioning mass transit system should be able to do. SF is tiny, geographically speaking; the time it takes to cover ground in SF using a car is a travesty, and more ubering will not make this better, unless we get a new ultra-high-cost variant which has rockets to blast the other traffic off the road like some terrible action movie come to life.
> There’s more to lifelong financial planning than “can I afford house payments?”.
I think a key difference here is pensions and social security too.
I live in Sweden don't have any lifelong financial planning. I expect to have a decent pension coming from payments made by my employer, not saved by me (I save a little to extend it just a little bit). I expect that if I get sick I'll get by on my public and private insurances.
That is: I expect to have a whole working life where I don't need to put aside anything. As long as I afford my house, car, holidays etc - I'm fine.
There are no future massive expenses such as my own pension, my kids' college or a sudden illness. And that's also at least partially why my salary is so low, compared to a place where the salary would be required to cover an expensive education, pensions, healthcare etc.
> I would rather have 50% higher expenses and 100-300% higher income
I think this is also a matter of culture. With 100-300% higher income you could argue that you can afford to take a month off every now and then, instead of having the 6w paid a german gets. But the cultural difference is that in the US, perhaps you don't. And with a huge income you can afford to take a year off after having a child. But the cultural difference might mean you can't (because management would object) and so on.
To paraphrase you: there is more to econominc planning than the purely economic too. I think americans often focus a lot (perhaps too much) on income and cost, when the real differences between countries are cultural and lies in how much holiday people take (not just are allowed to take), how long parental leaves are, and so on.
> That is: I expect to have a whole working life where I don't need to put aside anything. As long as I afford my house, car, holidays etc - I'm fine.
As an American, I think this may be the hardest thing to wrap my head around. Since I was a kid I (and anecdotally, many of my peers) have been told to never rely on a government or business-sponsored pension. What happens if the government swings in a different direction in the 3 decades before I retire? What if a couple bad administrations screw things up? What if the company who has my pension goes under or poorly invests it?
It seems that having nothing saved for yourself for your decades-away end of life care is putting A LOT of trust in a system that is less than 100 years old. I think this is where my desire to trade earnings for government services comes from... I can't guarantee that the services will be there for me, but if I manage my money conservatively I can more-or-less guarantee that it will be there.
Keep in mind that I'm also a software engineer, giving me the privilege to choose higher earnings over government services. If I were lower-income or in a line with less future earnings potential I might feel differently.
Yes we trust our government a lot. Too much probably. But we also don’t have much choice given how taxes work (high, progressive). The US is pretty special in that the working majority has been led to believe that low taxes and a small welfare state works in their advantage. Every poor person is just a temporarily embarrassed millionaire and so on.
If there was suddenly a broad political support in the US for a pension system guaranteeing anyone to retire at 65 with at least a minimum wage equivalent - then that would increase your taxes and make it harder for you to set aside part of your above-average income.
Same if voters suddenly realized that state funded maternity leave would be a good thing. Again a huge, expensive tax funded reform.
We have had all these reforms. Single payer healthcare, Free higher education, 1-2 years parental leave (state, not employer funded) etc.
All of this means I pay 30% income tax, a hefty payroll tax, and 10-25% vat on most goods - which in turn means I can’t set aside a ton of money for retirement. So in a weird sense we made ourselves dependent on the state, even those of us with high incomes are.
Especially with Sweden, I think jantelagen[0] is also an important thing to call out. Not so much in a negative tone, but more in terms of simply framing career success. There just isn't the same pressure to be a rockstar. You can be good at your job, even just ok at your job (maybe even bad at your job) for decades and that's fine.
That's not to say that ambitious and driven individuals are rare, but the amount of social judgement around career is significantly less in most circles than in the states.
I’m not just talking about retirement, although that is a big one. It’s like people in Europe are fine with having no cars/boats/planes and spending disproportionate amounts of their income on heavily taxed essentials like clothes and electronics. Cheap rent and food and healthcare don’t offset that enough.
There’s no way you can spin living in Europe as being a financially beneficial choice.
It’s fine if you want to live in a 40qm flat and never have any substantial assets your whole life, but don’t pretend that it’s a sound financial decision.
Oh I don’t mean financially. I mean simply as a quality of life trade off.
Choosing where to live is rarely purely a financial decision. If you migrate permanently it’s probably for other reasons. If you expect moving back to the US where you’d need your savings (e.g to retire) then you need to make it a partially financial decision of course.
Not sure what you mean by the 40sqm flat and no assets, that obviously depends on how much you make and what you decide to do with it. I live comfortably (new car, decent sized house etc) but that is at the expense of not putting aside much. In the US I could probably have more stuff and still set aside a lot of money because I’d be making 2x the money and have lower taxes (If I made 3 or 4 times the money it would probably be in places where I’d be living in a studio flat such as in SF).
But I think what’s being lost is that it’s hard to put a price on things like having long holidays, good working hours etc. None of that is exclusive to any country but it’s certainly differing on average.
In the end all of this is about what you value as quality of life. What kind of money you need to cover the kind of lifestyle you want.
I just moved away from Seattle after 6 years, where some argue the tech income-to-cost of living ratio might be the best in the world, due to the even higher cost of living in SF. (If I'm wrong, no matter, just substitute SF in your mind.)
Anyway upon moving away to a much lower cost of living area I've discovered one issue with the SF/Seattle-type areas is that you can't afford to be out of a job for very long, whether voluntarily or involuntarily, without the cost of living bleeding you dry.
If you don't want to live stressed out about losing your job due to bristling against some boss/company, or you might want to take a few months off from time to time to work on a personal project or just to relax, what I might do from now on is consider the pay-to-cost of living ratio of an area under the assumption that I work, say, 9 months out of every 12.
> one issue with the SF/Seattle-type areas is that you can't afford to be out of a job for very long
Absolutely true. Some years ago a contract gig I was working at in NYC was abruptly cancelled, and the following month or two were pretty stressful as I watched my emergency funds get so rapidly depleted due to the high COL there. Thankfully I was able to line something up but it was a valuable shift in perspective.
And as much as I'd love to do the 9-months-out-of-12, I'm not sure there's an easy way to pull that off in the US (or anywhere really).
I think it should be possible if you can live in some lower cost of living area if you can secure a remote role in a higher pay area.
Frankly, after the expensive 6 years in Seattle, I'm now spending some time in Budapest, Hungary, where the cost of living is particularly low and the city is particularly good.
The local salaries are remarkably low according to American expectations, but all I need to do is land an occasional part time project, or work perhaps 1/3 of the time to do quite well.
I've met some local folks who have pulled this off quite well, also, getting remote jobs in higher paying areas and living quite handsomely here. It has been a bit of an eye-opener for me.
Your children might not all be high income earners. You live somewhere like that and you're essentially condemning your (future) extended family apart and forcing yourself to stay on that same career track for a long time.
I'm jealous of one branch of my extended family that lives in one medium-cost city with a diverse set of career options and can keep their family bonds strong.
And if you don't live somewhere like that, you significantly limit your kids' opportunities to be high earners, and all the other valuable things that come with an in demand career.
I think the main difference is kids. Daycare, healthcare and education is much cheaper in most of Europe (due to high taxes).
You can earn more in the US as a top earner, but you can have a more relaxed and care-free life in Europe while still making a good living and retire early if you're one of those top earners.
People lament the falling fertility rate (esp. among a particular ethnic group), but they never want to do anything about the government policies and living costs and other social factors that are driving this reduced rate.
$60k USD minus taxes, rent, insurance, and other fixed costs is not going to buy you much healthcare. The cheaper places to live in the US might not even have decent healthcare options. Not to mention significant time off will result in termination.
If your health problems do not prevent you from working, it’s not a problem.. But keep in mind that even non-engineers and poor people have those benefits.
Until they experience a major medical event, survive and find shortly thereafter that they have been furloughed for "other reasons" because their insurance becomes too costly for the employer to afford.
And a new job to afford yet another payment? Where do I sign????
PS: not me... family, friends & acquaintances who had spent decade(s) with employers and after returning to work able bodied only to be subsequently let go for reasons other than their abilities to perform their duties.
And that is what Uni Health Care addresses, supposedly. The caveat is, while insurance providers must cover PECs, it says nothing about how much they will charge. The systemic problems with for-profit/quasi-social healthcare were not fixed nor addressed(outside more welfare options), it just mandated more participants paying into the coffers.
There’s more to lifelong financial planning than “can I afford house payments?”.