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Most Millennials are not on track when it comes to saving for retirement
- Finnucane 8y agoI remember how much I had saved for retirement when I was 32. It was pretty much nothing. Also: note to past self, when it occurs to you that you should buy Apple at 16, yes, you should, even though you have no money, and hold it forever.
- deepGem 8y agoI hope you mean the stock.
- Broken_Hippo 8y agoI, too, pretty much had nothing at that age. I hadn't had the sort of life that actually allowed for such things - between lowish paying jobs and a severely mentally ill spouse who gave me a gift of weird financial insecurity (no telling if I would have money one day to the next), my 20's weren't the best for that sort of saving. Heh. I don't have anything now either, but to be fair, I'm now a seasonally working spouse in a different country than I lived then :D I'm not so worried about it. Even if I'm poor, I'll be OK.
- gnicholas 8y ago> Most have less than $20,000 but some have much more. The average account balance is $67,891 It is amazing that the median is under $20k and the average is nearly $70k. This means there are some folks with very large retirement savings that are pulling the average up a lot. Considering this only includes folks up to age 32, this is really surprising. How much do these savers have socked away? Even when I worked in a big law firm, I didn't put that much in my retirement account because I was mostly saving to be able to buy a house (in the Bay Area). I can't imagine who these millennials are that have so much in a retirement account — presumably they also live in expensive areas if they are able to earn so much? Edit: Glad to see all the responses, including from folks who have healthy retirement accounts. It would be great if you could share where you live and whether you have bought or are planning to buy a home.
- dogma1138 8y agoIn in the UK my pension deposit is 24.5% of my pre tax salary that said this isn’t money I can touch for an emergency.
- dingaling 8y agoThat's always been my objection to pension arrangements in the UK. It's a cushy deal between the Government and financial institutions to lock-away money for 30+ years, and then tax the contributor when he becomes eligible to access it. Pensions should be tax-exempt at withdrawal, or else be accessible. Otherwise what's the incentive, other than when pre-tax contributions are possible?
- dogma1138 8y agoI agree, luckily I'm not a British citizen but as there is a tax agreement between the 2 countries I can move all my pension contributions outside of the UK without any tax. The pension tax deduction is also pretty poor and for every pound you earn above 100K you are losing your allowance which also infuriates me.
- knuththetruth 8y agoOr they have trust funds, inheritances, profited from dead parents home sales, etc.
- 2trill2spill 8y agoI save at least 15% of my salary and I live in a moderately priced city(Minneapolis). For me the biggest reasons for having a large 401K is starting early, the employer match, the S&P 500 performing well and the lowish cost of living, and of course a solid salary.
- nrhk 8y agoI'm assuming those are IB, Consulting grads at top undergrad business schools along with top undergrad engineers from the top 20. All three are raking in 100k+ starting at 22. Some of us also have parents who live close enough to major cities so saving on 1-2k a month on rent. There's a massive split in the millennial. There's a 0.1% who have parents rich enough that nothing matters, the 9.9% who are snapping up the competitive professional jobs and the 90% who are just trying to survive and start a career.
- sigfubar 8y agoI'm 32 and have enough cash on hand to last ~3 months in case of unexpected job loss, but that's all. "Retirement" isn't something I expect to be able to do.
- mjevans 8y agoMid 30s my self, I have cash in the bank of more than a year's worth of my current salary BUT, zero saved for retirement. I do not own a home, but expect to convert most of that liquid savings if the opportunity does arise. I do not make enough to qualify for owing a home in the area I live. I also don't anticipate growth in the markets long term over the period of my life to retirement; I fully expect the unfinished recession will need to show a bug ugly period again with an ACTUAL market correction and I foolishly hope we'll finally stop chasing bubbles after that because it will be politically untenable to not FULLY socialize retirement and (at least basic) health-care costs.
- close04 8y ago> I have cash in the bank of more than a year's worth of my current salary BUT, zero saved for retirement Just out of curiosity, what's the difference between money in the bank and money for retirement? Should the retirement money go into a dedicated (investment? pension?) fund? Can't they be your savings that you manage by yourself? I'm asking since I was raised with a different background with pension in Europe being a very different concept from the US.
- blang 8y agoI imagine they mean not in a retirement account that has restrictions (penalties for drawing money out early) but also has tax benefits
- mjevans 8y agoPrecisely that, as far as I am aware* (and I am not a financial adviser) the tax code in the US does not understand a mostly or easily liquid account that will only be touched for major life "investments" (such as a house) or during 'crisis' such as medical or employment hardships.
- gregrata 8y agoSo it would be nice if they contrasted this again other generations - "About 66% of people between the ages of 21 and 32 have absolutely nothing saved for retirement". So? My impression is other generations at this age also hadn't exactly been saving a lot. Is this just saying the millennial general is just the same as others? Or way out wack?
- knuththetruth 8y agoIt’s about 40% for Gen X and Boomers: https://www.fool.com/retirement/2018/01/29/guess-how-many-gen-xers-and-baby-boomers-have-no-r.aspx https://www.fool.com/retirement/2018/01/29/guess-how-many-ge...
- ghaff 8y agoWhich, if you're a Baby Boomer, is a rather more serious issue. It's one thing not to have saved much of anything for retirement in your 20s. It's another not to have saved anything by your 50s or--for that matter--if you're already retired.
- nostromo95 8y agoWell, to be fair an equivalent statistic for baby boomers wouldn’t be as alarming as it is for millenials: 1. A higher percentage of the population back then were working towards a pension and didn’t necessarily have to save. 2. The long-term health of social security wasn’t as much in question back then. Contrast that to today’s conventional wisdom of “plan like your SS payout will be $0.” And there are probably several other factors that suggest millenials should be more eager to save than their parents—rising costs of college for children, rising costs of end of life care, ever-increasing lifespans suggesting longer retirements, etc.
- ghaff 8y ago>Contrast that to today’s conventional wisdom of “plan like your SS payout will be $0.” In all fairness, people have been saying that for decades. You're right though that a lot more people used to have defined-benefit pensions. I'll even have a modest one from a long gone tech employer. Certainly don't see that much these days.
- cix_pkez 8y agoIn spite of all the statistics that suggest I'm doing pretty well toward retirement compared to most of my generation, I feel quite a bit of anxiety about how much I'm saving. I'm not confident that I'll receive social security. Huge health expenses may come up. How do others feel? You're not all billionaire unicorns on this site, are you?
- dionidium 8y ago> I'm not confident that I'll receive social security. This is a common sentiment, but it's a strange one to me. I think it's extremely unlikely that a program as popular as Social Security is going to just disappear. Entitlements have alligator blood. They're going to be really hard to get rid of. And, anyway, it's pretty foolish to think you can predict what's going to happen in politics 30 years from now. 30 years ago the Soviet Union still existed and nobody had heard of the Internet. And people want to tell me they know what's going to happen with Social Security?
- zokier 8y ago> And people want to tell me they know what's going to happen with Social Security? No, they are telling the exact opposite, that they do not know what is going to happen to social security. So they are not confidant that they will receive it because they do not know what will happen to it.
- dionidium 8y agoRight. But that's not saying anything. You could apply that statement to literally any aspect of government, but nobody does. They apply it specifically to Social Security. That's no accident. That's the result of a direct, targeted FUD campaign against Social Security.
- deleted 8y ago[deleted]
- peterwwillis 8y agoWhy would you expect it to continue existing just because it's popular now? Lots of things that were popular were eventually changed or removed. The consequences are serious and the time it takes to determine whether it's worth worrying about is in decades. It's like global warming. If you wait to find out what happens, it's too late. In South Korea, suicide rates are high because there is no social safety net. Old people just kill themselves. If SS gets made effectively defunct, what recourse will 2/3 of the aging population with no retirement have?
- blang 8y agoCNN really loves to write about Millennials and retirement: https://duckduckgo.com/?q=millennials+retirement+site%3Acnn.com&t=hi&ia=web https://duckduckgo.com/?q=millennials+retirement+site%3Acnn.... My favorites are: https://money.cnn.com/2014/05/02/retirement/retirement-millennials/index.html https://money.cnn.com/2014/05/02/retirement/retirement-mille... https://money.cnn.com/2015/05/06/retirement/retirement-savings-millennials/index.html https://money.cnn.com/2015/05/06/retirement/retirement-savin... written almost exactly a year apart and contradicting the other articles
- kcorbitt 8y ago> "I see in practice that a lot of us are putting retirement down the goal priority list, in favor of paying off student debt or buying homes," If that's the actual reason why retirement savings are low, then this sounds more like a paper crisis than a real one. If you're putting $30k a year towards paying down student loans or home equity, then – assuming nothing changes – eventually you're going to "fill" those buckets and start saving $30k a year for retirement, which over the course of a normal career should be plenty to retire. That said, I have my doubts that millenials' low retirement savings as a group is really because they're saving in another bucket.
- mrhappyunhappy 8y agoAnd what do you suppose is the real issue?
- seangrogg 8y agoNot the parent, but I'd imagine that the real worry is less "they're just paying down loans" and more "once those loans are paid they still won't be contributing towards retirement".
- ghaff 8y agoAt 32, I would have had very little saved. I was finishing my second Master's degree about then and had worked for a few years but most savings from that first job were burned in grad school and I had gained a bit of debt in the process. I bought a house 10 years later and have generally done a decent job of saving money but, depending upon your priorities, education choices, etc., I'm not sure that not having saved money for retirement in your 20s (except perhaps to the degree that you're forsaking 401k matching, etc.) is automatically a sign of poor money management.
- gnicholas 8y agoI wonder how stats like these will impact home prices in 20 years. Will it be a buyer's market because there will be lots of boomers downsizing/deceasing, and not nearly as many buyers flush with cash?
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- bbg215 8y agoEveryone viewing this thread is likely an extreme outlier. The majority of millennials are prob making less than 50K until their 30s/40s.
- scarface74 8y agoJust to provide a reference... https://dqydj.com/income-percentile-by-age-calculator/ https://dqydj.com/income-percentile-by-age-calculator/ It’s about $45K for a 35 year old.
- bcheung 8y agoI never liked the accumulate and pray you have enough to last model. If you don't die before you money runs out your plan fails. Any plan that has death as a pre-requisite to be successful is not a very good plan in my book. Acquiring income producing assets seems like a much better plan.
- jpetso 8y agoIn response of retirement savings, "accumulate" generally does mean acquiring income producing assets. That's what stocks and bonds are. They just have a lower risk/reward profile than putting all your eggs into a single owned company.
- bcheung 8y agoThose a generally considered appreciation assets not income producing assets. You can't extract any value from them without disposing of them. Income producing assets produce income while you still own them without you having to sell them. Dividend paying stocks would be an exception. Not suggesting putting all your eggs into a single owned company. That's a separate issue.
- purplezooey 8y agoMillennials need to get off their duff and vote. 18% voting rate. One millennial I recently talked to said, "yeah, I just don't know anything other than the signs people put up in their yard.". Wtf.
- chadlavi 8y agoA lot of us aren't even on track when it comes to saving for just normal life.
- NZThrowaway 8y agoThis thread got me thinking and thought I'd post. Made a throw away for this as my real account can be linked to me far too easily... $ are in NZD. 32, living in down south in New Zealand. Working for clients around the world, mostly in the UK. Making $150-180K per year. Bank accounts $15K in NZ ~$50K in the UK account from client payments over the last few months Own the house we built for $580K in 2016, it has recently been valued at $650K. Have a mortgage on that of $320K. Have another mortgage of $180K on a $260K house split with a friend when we brought a rental property at the start of this year. Have about $10K worth of crypto, down from dizzying heights at the start of the year :D, from a $4k gamble just over a year ago. I think we have ~$20K in a superannuation accounts, which we haven't put anything into since I've been working for myself. Interest rates on the mortgages are 4.19% p.a. Other than the mortgages we have no other debts. We being my partner and I, our 1 year old, a dog and 2 cats. On one hand I feel like we're doing OK. But for the amount I'm making I feel like we should be saving / investing more.
- nealdt 8y agoI have a few kiwi friends and it seems like most of them (and most of their friends over there) are financially very successful regardless of their profession and background. Appears to be a very good time to be in NZ!
- sh_123 8y agoThis thread is a wake up call for me. What are good resources to learn more about saving for retirement? IRAs, 401Ks, etc.
- tribesman 8y agoI've saved roughly 15 million and gave away 10 million to my girlfriend. From the sale of my company.
- Grangar 8y agoRealize that you're one of the lucky few.