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Why does it seem so hard to break 200?
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Rising Star
What is tier 1 2 3 stuff?
When is the Deloitte Tax comp call?
Every single day
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$400k houses don’t even exist in some places
Or small guest house
Chief
They are saving up for their divorce
Depends on the person. I know partners that retired with their house paid off, was inheriting his in-laws local CPA practice, had a side gig at the university lined up (for the healthcare benefits mostly) and was still terrified about money. I know other partners that live paycheck to paycheck with a lot of debt but seem to always be having fun.
I try to fall in the middle somewhere.
First off, not all of them make $500k. There are partners making $300k in their first year. Also, by the time you make partner most people have either already purchased a home or are in the process of purchasing a home. Then there is the 150k buy-in or loan to actually become a partner. By the time partners are making $500k a year their kids are already in school and their families are settled where they already live. It would be pretty silly to uproot your family and move into a house that is 1500 sq ft larger just so you can be considered a "baller" by the associates at your firm. Lastly, $500k a year isnt that much money when all is said and done. If you send three kids to a top private school that is around 90k off the top right there. By the time you're 40 you care less about impressing other people, and more about what is actually important in life.
The question in the original post was why don't partners live in million dollar houses and drive expensive cars. I was only trying to explain that other more practical luxuries can add up quickly and $500k a year is really not enough money to do it all while also living in a million dollar home and owning a couple 100 thousand dollar cars.
Our town houses are more than 400k. Are you sure they live in 400k houses?
How’s the downtown area? I was thinking of moving there
Taxes
You cannot judge a person's wealth by their home...some of the richest people live frugal lifestyles for a variety of reasons (Warren Buffett comes to mind). I know lead partners that are making well over $1M/year but still live in the home they raised their kids in. I personally am working towards early retirement, so that I don't have to stay until I'm fully vested in my deferred comp. I've also seen some partners that have big homes and the latest luxury car, but have difficulty pulling together the money to pay their taxes because they are spending rather than saving. If you want to be a partner until you're 60, go for it...some of us are looking to build up our wealth early on to enjoy the last 30+ years of life.
Rising Star
Maybe you only know the newer partners that are still paying into the partnership loan?
I’ve seen both ends of the spectrum as far as cars go. I used to work for a firm where I got shit raises (2-3% a year), and the partner bought a new Mercedes. But at my current firm, where the raises are more in line with accounting firms I know one of the partners has a Ford. At the end of the day, cars are a depreciating asset.
We had a partner at PwC driving a 20 year old BMW. He bought it new.
Every partner in my second tier city has a million dollar first home
You may be overestimating the comp of your partners. If you are not in the B4, partner comp drops very quickly afterwards. So $500k may at best be the average of all partners with younger partners at $200k and +15 years less than $1m. Good money but not crazy money.
Rising Star
I’m fixed income (guaranteed payment plus bonus) and pull about $220k with a midsize regional in LCOL. I’ve had a great couple of years and shooting for equity near term. About $26m profit divided between 25 or so equity partners. Maybe not Big 4 money but VERY comfortable.
I'm not a partner yet and my old condo costed 1M+
No idea which partners you are talking about . I know few who all live in million plus houses, nice sport cars and lavish styles. Though it’s all personal choice. Having a lot of money does not mean one has to live in big house or drive 300K car etc. Some just don’t care about materialistic things. I am talking of my friend who made it big, has $ 500 millions plus as he sold his company few years back but he still wears his favorite Levi’s jeans and drives Lexus.
In SoCal, I once sat in a P’s car, and it was a Toyota , not even a new Toyota. He is a new P though. I know for sure some managers in the group drive Audi/bmw/Benz
Rising Star
I never spent money on myself when I was married because my crazy ex wife spent it all ( besides what went into retirement, education, etc.). First time in my life I’ve had expendable income to myself. I feel zero guilt whatsoever about splurging on a new X3. I’m loving it. Also a good recruiting tool.
This thread was interesting to read. I think moral of the story is that nearly all partners generally have the means to live a luxurious lifestyle, but not all of them do for various reasons (prefer to be frugal, family needs, etc.). Comes down to what you need to take care of and what you want to prioritize, and you can do whatever the hell you want with your money. At the end of the day, I’d rather be a partner making $300K and genuinely enjoying my life however I see fit than to be making $500K or more but miserable.