This is commonly brought up but isn't correct simply because what matters more is generally the absolute amount of disposable income you have, not the percentage of your total salary.
If you make 400k / year (typical for a FAANG senior engineer, which plenty of people people reach in their mid-to-late 20s) your expenses might break down as:
- 160k taxes
- 50k housing (luxury 1 bedroom in SF or Palo Alto)
- 10k food (eat at work on weekdays for free, $200 a weekend to eat out at nice restaurants)
- 10k transportation (Tesla Model 3 like everyone else)
= 230k total
So you end up with ~170k a year of disposable income while living very well. If you were willing to cut expenses to the bone (roommates is the big one, cook for yourself, old car) you'd probably end up at around 200k of disposable income. 170k-200k is more than most software engineers can hope to make in gross income in the Midwest. Sure, you might not want to buy a house for $2M, but with just two years of savings you can move to the Midwest and buy a house outright. After 10 years (remember, most of these people would be in their late thirties) you could easily save ~$2M before investment returns and retire to a low cost of living area.
For people who are not tech workers and live in the Bay Area making <$100k / year, there is definitely a great argument that the cost of living is way too high. For software engineers, it's worth remembering the cost of living is so high only because software engineers get paid so much.
If you make 400k / year (typical for a FAANG senior engineer, which plenty of people people reach in their mid-to-late 20s) your expenses might break down as:
- 160k taxes
- 50k housing (luxury 1 bedroom in SF or Palo Alto)
- 10k food (eat at work on weekdays for free, $200 a weekend to eat out at nice restaurants)
- 10k transportation (Tesla Model 3 like everyone else)
= 230k total
So you end up with ~170k a year of disposable income while living very well. If you were willing to cut expenses to the bone (roommates is the big one, cook for yourself, old car) you'd probably end up at around 200k of disposable income. 170k-200k is more than most software engineers can hope to make in gross income in the Midwest. Sure, you might not want to buy a house for $2M, but with just two years of savings you can move to the Midwest and buy a house outright. After 10 years (remember, most of these people would be in their late thirties) you could easily save ~$2M before investment returns and retire to a low cost of living area.
For people who are not tech workers and live in the Bay Area making <$100k / year, there is definitely a great argument that the cost of living is way too high. For software engineers, it's worth remembering the cost of living is so high only because software engineers get paid so much.