Thank God for the Social Security Administration (SSA). This government agency was created in 1935 as part of FDR’s “New Deal”—a series of reforms and spending initiatives often cited as the reason the U.S. got out of The Great Depression (I’d argue World War II is what did it, but I digress..)
Yes, the good ol’ SSA of the U.S. of A. Based in Woodlawn, MD (same city where the wife and I got married, coincidentally), the SSA manages the largest government payment program on earth—making up more than one-third of our total gov’t expenditures. Never you mind that the program is wrought with error and impending insolvency, the SSA is absolutely essential. Why? Not for the benefits, but rather that helpful little e-mail I get at the end of each year…
The e-mail from the SSA is a reminder for me to check my projected SS benefits (should I work ‘til 62, 65, or 70). But, even better, it’s the most convenient place in the world that shows my gross taxable wages each year since my conception into the workforce. I decided to graph my total earned wages since I started working (at age 15) until today. It’s telling. I’m going to share that graph with you and offer some fascinating commentary.
My Annual Wages By Year
No single chart can ever tell the whole story, and this one is no different. One thing that jumps out at me is that my Army years (2003-2009) weren’t quite as lean as they appear. Even though I entered as a Private, money was never an issue. I remember a “good month” was when my credit card bill was under $100. I spent next to nothing. Food was free, barracks were free, gym was free, healthcare was free, COLLEGE WAS FREE! The only things I paid for was Gatorade, my cell phone, and the ubiquitous alcohol consumption. Life was good, and cheap. (Even the alcohol was cheap. My buddy Grant and I patented “brew,” which was code for a really, really watered-down beer).
I would categorically recommend to every high school graduate that they should join the Military. It’s not quite the same type of experience as college (morning PT, likely deployments, relatively strict environment), but the camaraderie, friendships, and life experiences you get from the military is either on-par or more meaningful than what you might get in college. You also get the chance to serve your country. What’s more, if you’re smart about it, you can leave after a few years well on your way (or completed) with a degree, a pile of work experience, AND have solid hunk of cash to your name (and no debt).
In 2009, leaving the military, financially, was obviously a good decision. Even though the military earnings are artificially depressed because they don’t include certain allowances and benefits, my pay outside the military was unquestionably higher. This is about the time I started investing in my 401(k), maxing it out each year starting in 2010. This was, in hindsight, some pretty damn lucky market timing. I’ve only contributed $85k over those years, but the balance now sits at about $120k—a cash-weighted CAGR of about 14%. The Roth IRA contributions were not quite as timely, but still not bad. My CAGR on those funds is about 13%, well ahead of the S&P’s 7% over that time (thank you, Netflix).
What wasn’t such a good decision is that dip at the end. Leaving our home this year to move to NYC for an internship and lower salaried permanent position is clearly moving financially backwards. Twenty years from now, I know that I would have regretted not taking the plunge when I had the opportunity, so it’s nothing I’ll regret in the end. But, the numbers clearly haven’t worked out. At this point we’re just sucking it up, taking it as a life experience (not everyone takes a chance to live in NYC, after all) and making as many memories as possible before we head out.
What’s the takeaway here? I was honestly surprised how low these numbers were. I’ve made some pretty tragic mistakes when it comes to money in my life, but I’ve still managed to scrape together a pretty sizable net worth ($300k or so, at time of writing). I suppose all I can say is that you don’t need to make a ton of money right off the bat to piece together a good bit of scratch.
Or, maybe I’m looking at this all wrong. I haven’t seen a lot of “income progression” charts, so it’s possible that I’ve been very blessed. What do you think? Thanks for reading!