Let's do a simple budget for a $400K household. This puts you in the top 1.2% of incomes, nation-wide, by the way. Say, 40% of that goes towards income taxes (A bit of a high estimate, even, since taxes are progressive, there are deductions, your 401K isn't taxed, but whatever).
That leaves $240,000.
Two adults, so $40,000 goes to your 401K, no questions asked. It's the responsible thing to do. You're already saving as much as a median SF household takes home, but that's fine.
Two cars. You can buy a working car that will probably last you seven years for $10,000, or ten years for $20,000. Let's ammortize it at $2,000/year, with another $3,000/year in gas, insurance, oil changes, tires, etc.
That's $190,000 left over. Let's say you take two nice family vacations, for another $20,000 total. That's not living frugally, since you're spending more money on fun then what someone making your coffee makes in a year, but that's fine, you're definitely middle class.
Let's say you save another $50,000/year. Kids need braces, your car may get dented, you might want to order tex-mex every once in a while, you want to build that retirement fund.
You're left with $120,000/year in cash, to spend on food and housing.
If you can't figure out how to live on that, I hate to break it, but you're mismanaging your money. The median SF household lives on $77,000/year - that is BEFORE taxes. Half of them manage to raise at least one child on that. $400,000/year is completely out of touch with what normal middle-class people can spend. You don't need two Model Ss, Junior doesn't need to go to a top 5% elementary school, and you can probably make due without a two-week trip to Spain and another to Hawaii.
But my neighborhood is the "poor" neighborhood. Most of the folks who live here make about $200K-$300K a year.
Over in the $400K neighborhood, their houses are about 2000-2500 sq ft, and cost about $3.5M. Keep in mind the median home in the US is about 2200 sq ft, so these houses are right in line with the US median.
At $3.5M, assuming they can save a 20% down payment, they'll be paying $14,000/mo in mortgage and $3,000/mo on property tax. So that's $204,000 a year just on housing to live in a median size home with good schools.
Using your math, after taxes and 401K, that leaves $38,000 a year for everything else. Or if you skip the 401K, it's $78,000 in post tax money.
So like I said, you aren't hurting, but you aren't crazy rich either.
So yeah, you're not hurting, but you're not wealthy enough to retire and maintain that lifestyle.
Sure, you could "live frugally" and retire after a few years, but you'd literally have to live in a tent and then retire somewhere that isn't California. That might be ok for some, but for others it isn't.
I don't know how people making less than $200K a year live here comfortably. I mean I do know, because I know people like that. They live in a house that they inherited from their parents, they don't do anything out of the house, and they live near bad schools with high crime.