I have decided to make this post on behalf of a close friend. He is a young professional working in San Francisco and making ~ 132K USD per year paid in biweekly fashion. Single and he doesn't own a house or a car, just in case you are thinking is me, :-) I wish.
He showed me his pay stub and I was surprised at how much he was paying, so we agreed on asking to the community. This is his detailed pay stub figures.
GrossPay PreTaxDeductions EmployeeTaxes PostTaxDeductions NetPay 5,089.01 467.82 1,774.43 4.66 2,841.12
These are the employee taxes:
Description Amount OASDI 306.33 Medicare 70.25 FederalWithholding 1001.81 StateTax-CA 350.05 CASDI-CASDI 44.32
And pre-tax deductions:
Description Amount 401(k)SavingsPlan 302.99 DentalPlan 10.45 HealthCareSpending 1.28 LongTermDisability 11.11 MedicalPlan 40.32 VacationBuy 97.62 VisionPlan 1.06
Description Amount Supplemental Life/ AD&D Insur. 4.61
And finally the allowances:
Federal State MaritalStatus Single Single/Married(with two or more incomes) Allowances 0 0 AdditionalWithholding 0 0
I understand that he is putting money away in his 401(k) for retirement and that he decided to buy an extra week of vacation so that he gets 4 a year. But isn't it outrageous that ~45% of his paycheck is gone?!!!
I used to think that 130K a year would, simply put, be A LOT of money, but not really if you receive actually half of that once you decide to save for retirement, which I guess is something most people want to do at some point, and have some medical plan. Then if on top you pay rent in SF, decide to own a car or maybe even marry and have a kid...
I can't help comparing to Europe where I lived for a few years. Sure, taxes are very high there, but at least you get something in return, such as medical coverage, affordable universities, government retirements and a long etc.