6 ms·

Seattle might be an exception, but this site suggests COL is ~50% higher in SF than Toronto [1], USD is 33% stronger than CAD. Basically, if Vector Institute ca

by cing 9y ago

Seattle might be an exception, but this site suggests COL is ~50% higher in SF than Toronto [1], USD is 33% stronger than CAD. Basically, if Vector Institute can offer 200K CAD, it's no different than 250K USD in SF. Is my math wrong? [1] https://www.expatistan.com/cost-of-living/index/north-america https://www.expatistan.com/cost-of-living/index/north-americ...

deleted 9y ago
[deleted]
lewisl9029 9y ago
The math sounds about right, but the kind of COL calculation you just made assumes people spend all the money they make with no savings/investments. A more realistic model for most high-income earners that accounts for savings/investments would heavily favor higher salary+COL regions. For a simplistic illustration of this using the same numbers, if you spend 100k CAD a year and make 200k CAD, you can save 100k CAD a year. If you spend 150K CAD (50% higher COL) and make 312.5K CAD (equivalent to 250K USD at 1.25 exchange rate), you'd save the equivalent of 162.5K CAD a year.
- davidgay 9y ago
  You seem to be assuming that the SF and Toronto workers will retire to the same place, so the extra savings of the SF worker will go further. Conversely, if you assume that the SF worker retires to a place with a 50% higher COL than the Toronto worker, the difference disappears. Personally, my backup plan is to retire to Bulgaria based on SF savings ;)
  - lewisl9029 9y ago
    If we take into account the time-value of money (which would be natural since we're talking about savings/investments that are subject to inflation and compound interest), higher income + higher COL remains favorable even if the cost of living ratio remains constant upon retirement.
    - davidgay 9y ago
      Hmm, no. Each per-year saved amount is compounded by the same multiplier k after N years (assuming the same interest rate), so if you start with 1.5x more, you end up with 1.5x more.
      - lewisl9029 9y ago
        You're totally right. I clearly wasn't thinking straight when I made that comment. There is still plenty of inherent value in accumulating wealth at a faster pace though.

by cing 9y ago

deleted 9y ago

[deleted]

lewisl9029 9y ago

The math sounds about right, but the kind of COL calculation you just made assumes people spend all the money they make with no savings/investments. A more realistic model for most high-income earners that accounts for savings/investments would heavily favor higher salary+COL regions. For a simplistic illustration of this using the same numbers, if you spend 100k CAD a year and make 200k CAD, you can save 100k CAD a year. If you spend 150K CAD (50% higher COL) and make 312.5K CAD (equivalent to 250K USD at 1.25 exchange rate), you'd save the equivalent of 162.5K CAD a year.

davidgay 9y ago
You seem to be assuming that the SF and Toronto workers will retire to the same place, so the extra savings of the SF worker will go further. Conversely, if you assume that the SF worker retires to a place with a 50% higher COL than the Toronto worker, the difference disappears. Personally, my backup plan is to retire to Bulgaria based on SF savings ;)
- lewisl9029 9y ago
  If we take into account the time-value of money (which would be natural since we're talking about savings/investments that are subject to inflation and compound interest), higher income + higher COL remains favorable even if the cost of living ratio remains constant upon retirement.
  - davidgay 9y ago
    Hmm, no. Each per-year saved amount is compounded by the same multiplier k after N years (assuming the same interest rate), so if you start with 1.5x more, you end up with 1.5x more.
    - lewisl9029 9y ago
      You're totally right. I clearly wasn't thinking straight when I made that comment. There is still plenty of inherent value in accumulating wealth at a faster pace though.