Millennials want to retire by 61, but most have nothing saved

[clapclapclap 9000]

https://www.cnbc.com/2018/07/17/ideal-retirement-age-for-millennials.html

Millennials may have only a little saved for retirement, but they still want to retire early.

A recent Bankrate.com survey asked millennials, classified as Americans ages 18 to 37, what the perfect time to retire would be. Their answer: 61 years old.

“Early retirement is something that seems very appealing,” Bankrate.com analyst Amanda Dixon tells CNBC Make It.

If only wishing made it so. The median retirement savings among millennials is about $19,100 — and roughly two-thirds have nothing saved so far, according to a February report by the National Institute on Retirement Security.

“Unfortunately, even though 61 would be a great age to retire, it’s just not the reality for most people,” Dixons says. In fact, Nerdwallet calculates that a more realistic outcome for the graduates of the Class of 2018 is a retirement age of 72 — and that's only if they budget wisely.

If you are looking to retire on the early side, experts recommend doubling down on your contribution level to a 401(k) or IRA and automating your deposits. The average millennial is contributing about 7.5 percent of their income, according to Fidelity. But that’s way below the suggested rate of 15 percent.

“You have to make it something you’re doing consistently,” Dixon says, adding that retiring early does take some extra effort. And that can include doing things like tracking your spending, living in a cheaper home and even dining in more often, according to those who have achieved early retirement.

That said, building these habits when you're young will have the biggest impact. Even if you're like most millennials and have student loan debt, that doesn't automatically preclude you from retiring early.

“It is definitely possible to pay off your debt and save for the future at the same time,” Dixon says.

Edited July 18, 2018 by clapclapclap

[Dahobbs 17818]

While this thread feels like it was supposed to be a criticism of millennials, the actual report is a bit more nuanced and interesting than the cited article (surprise!):

Quote

 Today’s Millennials (individuals born between 1981 and 1991) number 83.2 million,1 and are the largest, best educated, and most diverse generation in U.S. history. However, this generation is viewed as less financially savvy than previous generations when it comes to saving for retirement, budgeting, and establishing and maintaining a financial plan. Specifically, Millennials are characterized as spending too much money on unnecessary expenses. Yet, as Bank of America details in their 2018 report, these perceptions may be as outdated. Millennials are saving at the same rates as Generation X (“GenX”), more Millennials have a savings goal than other generations, and Millennials feel more financially secure than GenX.5

Still, 21 percent of Millennials already worry about their retirement security.6 Among Millennials, nearly half are concerned that they will not be able to retire when they want to, while two-thirds are concerned about outliving their retirement savings.7 More than ninety percent agree that the nation’s retirement system is under stress and needs reform.8 Given that this generation has witnessed their parents struggle to make ends meet during retirement, their concerns about achieving retirement security—even though decades away— are warranted.9

Adding to Millennials’ challenges, this generation is expected to live longer than the Baby Boomers (“Boomers”) and GenX that precede them.10 More than half of Millennials are expected to live to age of 89 and beyond.11 With their increased life expectancy, lower income replacement from Social Security, and a lower likelihood of having a traditional defined benefit pension, this generation will need to save significantly more than previous generations in order to maintain their lifestyle during retirement. In fact, recommendations from many financial experts indicate that Millennials will need to put aside 15 to 22 percent of their salary—which is double the recommendation made to previous generations.12

Millennials have and will continue to face a harsh economic landscape. Given that most Millennials entered the workforce at a time of depressed wages, high levels of unemployment, and major structural changes in the American economy—the Great Recession exacted a heavy price from this generation.13 As a direct result of the Great Recession, the Millennial generation has earned about 20 percent less in wages, are less likely to own a home, and have accumulated about half of the wealth of their parents at the same stage in their lives.14

This report is based on the author’s analysis of the 2014 Survey of Income and Program Participation (SIPP) data from the U.S. Census Bureau. It examines the distinct challenges posed by the current retirement system in America for working Millennials between the ages of 21 to 32. Specifically, this report examines the access, eligibility, and participation in employer-sponsored retirement plans for Millennials; barriers to participation in employer-sponsored retirement plans for Millennials; retirement savings and adequacy of Millennials’ retirement savings; and retirement plan coverage of Millennials by the industry where they are employed. It also examines how the retirement crisis affects different racial and ethnic cohorts in the Millennial generation.

The key findings of this report are as follows:

1. Two-thirds (66.2%) of working Millennials have nothing saved for retirement. This situation is far worse for working Millennial Latinos, as 83 percent have nothing saved for retirement.

2. Using the recommendations of financial experts, only five percent of working Millennials are saving adequately for retirement.

3. Even though two-thirds (66%) of Millennials work for an employer that offers a retirement plan, only slightly over one-third (34.3%) of Millennials participate in their employer’s plan.

4. There is a significant gap between Millennial Latinos and other racial and ethnic groups in terms of participation in employer-sponsored retirement plans. Only 19.1 percent of Millennial Latinos and 22.5 percent of Latinas participate in an employersponsored plan, compared to 41.4 percent of Asian men and 40.3 percent of Millennial White women, who had the highest rate of participation in a retirement plan.

5. Four out of ten (40.2%) of Millennials cited eligibility requirements set by employers, such as working a minimum number of hours, or having a minimum tenure on the job, as a reason for not participating in a plan.

6. Hope for improvement for this generation stems from the fact that across all racial and ethnic groups, more than nine out of ten Millennials actually participate in employer-sponsored retirement plans, when they are eligible to participate.

TLDNR: More millennials want to save than previous generations, but economic conditions (e.g., the recession) have prevented them from saving. Additionally, millennials are expected to live longer AND  have lesser access to social safety nets, meaning that millennials need to save more for retirement than previous generations. 

Edited July 18, 2018 by Dahobbs

[MNLonghornFUKM 8918]

Most will have still have nothing saved by the age of 61.

 

I mean once you hit medicare age if its even a thing in 30 years, thats everything. but if you have to work to afford health care then I dont see how 61 is a target age. 

[52-80 19282]

Stop being poor, asshats

[Skipper 6325]

18 to 37 is a pretty wide range. Pretty disingenuous to include 18-25 year olds in analysis of retirement savings.   A median for those between the age of 30-37 would be more interesting and would probably still support the position that they aren't on pace to retire by 6.

[SDG 3319]

I only want to date 10’s but reality says that isn’t going to happen.  That’s a click bait article because everyone “wants” to retire early...

[Spankytoes 1747]

Just now, SDG said:

I only want to date 10’s but reality says that isn’t going to happen.  That’s a click bait article because everyone “wants” to retire early...

100% this.

"Studies show that males prefer to drive a Ferrari over a VW bug"

[Js1 85817]

Another thread about how awful millenials are! Just what Surly needs.

[NotActuallyALonghorn 4980]

Class of 2018 being used to calculate a more realistic retirement age of 72 is kinda disingenuous as well. I don't think anybody really considers them millennials, and even if they do that would be the very youngest of the bunch. Class of 2004 or so would be more realistic.

[Aqua Buddha 14658]

How are they different than Boomers who all took SS at 62?

[Cheeseweasel 26438]

4 minutes ago, NotActuallyALonghorn said:

Class of 2018 being used to calculate a more realistic retirement age of 72 is kinda disingenuous as well. I don't think anybody really considers them millennials, and even if they do that would be the very youngest of the bunch. Class of 2004 or so would be more realistic.

"A Millennial is anyone younger than me that I don't like."

-Article writers

[Captainant 27989]

It's pretty fucking absurd to try and save much for retirement right now. I'm chucking away nearly $2k a month in student debt payments for going to UT for five years. College is fucking absurdly expensive, and if you don't get many scholarships then you get to get deep dicked by 4-6% interest rate loans. I'm glad I get to pay off a house before I get to buy a house. 

[clapclapclap 9000]

13 minutes ago, Captainant said:

 and if you don't get many scholarships then you get to get deep dicked by 4-6% interest rate loans. I'm glad I get to pay off a house before I get to buy a house. 

So you think 4-6% is high?

https://www.cappex.com/hq/articles-and-advice/financial-aid/student-loans/Historical-Student-Loan-Interest-Rates

Years	Fixed vs. Variable	SLS
7/1/1987 to 9/30/1992	Variable	12M T-Bill + 3.1%, cap 11%
11/1/1982 to 6/30/1987	Fixed	12%
10/1/1981 to 10/30/1982	Fixed	14%
1/1/1981 to 9/30/1981	Fixed	9%

[Doc Reeves 6434]

Entitlement is kinda funny from the outside looking in.

 

[Captainant 27989]

Just now, clapclapclap said:

So you think 4-6% is high?

https://www.cappex.com/hq/articles-and-advice/financial-aid/student-loans/Historical-Student-Loan-Interest-Rates

Years	Fixed vs. Variable	SLS
7/1/1987 to 9/30/1992	Variable	12M T-Bill + 3.1%, cap 11%
11/1/1982 to 6/30/1987	Fixed	12%
10/1/1981 to 10/30/1982	Fixed	14%
1/1/1981 to 9/30/1981	Fixed	9%

Cost of college increased 260% while inflation only pushed CPI 120%. The state used to fund a far greater portion of public universities. Those costs are now being passed on to students. A higher interest rate is bad, but it's not so terrible when your principle amount is less than half of what it would be today. Nevermind that wage growth is effectively stagnant over the last couple decades, further undermining the ability of student borrowers to pay off their education debt.

[clapclapclap 9000]

Sometimes

Sometimes

[Okie State 3867]

“Early retirement is something that seems very appealing."

What a great quote.

[52-80 19282]

maybe these millenials should cut their spotify subscription, and spend less time at starbucks eating avocado-toasts, they would be able to build a sufficient nest egg.

[BottleRocket 647]

I’m concerned that males and females between the ages of 2 and 15 haven’t saved squat for retirement and half of those demand smartphones, iPads, and good WiFi.

[MNLonghornFUKM 8918]

I only want to date 10’s but reality says that isn’t going to happen.  That’s a click bait article because everyone “wants” to retire early...

I think you have a shot if you shave that thing under your lip 

 

 

[Celery Man 21028]

Outpacing boomers already

[Trey3216 15381]

1 hour ago, Captainant said:

It's pretty fucking absurd to try and save much for retirement right now. I'm chucking away nearly $2k a month in student debt payments for going to UT for five years. College is fucking absurdly expensive, and if you don't get many scholarships then you get to get deep dicked by 4-6% interest rate loans. I'm glad I get to pay off a house before I get to buy a house. 

Stop paying so much and invest more than half of that payment.  You’ll be happy in 20 years when that $12k annually has compounded nonstop 

[NotActuallyALonghorn 4980]

54 minutes ago, Captainant said:

Cost of college increased 260% while inflation only pushed CPI 120%. The state used to fund a far greater portion of public universities. Those costs are now being passed on to students. A higher interest rate is bad, but it's not so terrible when your principle amount is less than half of what it would be today. Nevermind that wage growth is effectively stagnant over the last couple decades, further undermining the ability of student borrowers to pay off their education debt.

While states may have decreased funding, colleges have greatly expanded their bureaucracy and force students to pay for much more. In addition to much nicer dorms and stuff that cost much much more.

[Brisketexan 105626]

Yep, stupid article with stupid premise.

100% of Brisketexans would like a new truck, a wife who is open to me having a relationship with Milana Vayntrub, Milana being open to same, and $30 million in the bank just for shits and giggles.

As for savings rates among younger people - and because this seems to be a point of comparison with older generations - it would probably help if we started with the expense side of the ledger as a percentage of average income.  Income for most has remained stagnant for decades.  But some significant cost centers have SIGNIFICANTLY outpaced inflation: on higher ed, healthcare, and housing, younger folks spend a much greater percentage of their income on those things than the prior generation had to spend.

But a headline of "a generation that has to spend 50% of its income on things that the prior generation only had to spend 30% of its income on is not saving as much as the prior generation" doesn't really grab ya, or play into the "stupid lazy entitled millenials" trope.

[FondrenRoad 4378]

1 hour ago, Aqua Buddha said:

How are they different than Boomers who all took SS at 62?

Or who had pensions that fully vested in 20 years.  It isn't like Boomers were fiscally responsible.  A large chunk of them retired with 0 additional savings.  They simply had a government and companies that actually gave a shit about them.

Edited July 18, 2018 by FondrenRoad

[Aqua Buddha 14658]

4 minutes ago, FondrenRoad said:

Or who had pensions that fully vested in 20 years.  It isn't like Boomers were fiscally responsible.  A large chunk of them retired with 0 additional savings.  They simply had a government and companies that actually gave a shit about them.

Yeah, if there's any group to be lecturing anyone about saving for retirement, it's no the current olds.

[FondrenRoad 4378]

3 minutes ago, theCruiser said:

One thing the data bears out is that Millennials like branch banking.  They enjoy getting dressed up on a Saturday morning to go meet the local bank's president and engage he and his team in a variety of exciting financial products like laddered CD's.  Why community banks aren't opening up more and more physical branches with plenty of parking and 8-teller lanes wide, I have no idea.  Seems like the wave of the future.  

You jest, but that's probably not far off.  Farmers markets are all the rage.  As is artisanal and local everything.  Hipsters have even brought back the milkman in some places.  Eventually, they'll desire community banking again.  Gen X were bigger on abandoning community and human interaction during business transactions.

[Cheeseweasel 26438]

25 minutes ago, NotActuallyALonghorn said:

While states may have decreased funding, colleges have greatly expanded their bureaucracy and force students to pay for much more. In addition to much nicer dorms and stuff that cost much much more.

[Aqua Buddha 14658]

6 minutes ago, FondrenRoad said:

You jest, but that's probably not far off.  Farmers markets are all the rage.  As is artisanal and local everything.  Hipsters have even brought back the milkman in some places.  Eventually, they'll desire community banking again.  Gen X were bigger on abandoning community and human interaction during business transactions.

Yeah, financial planners will tell you that millennials surprisingly like some face to face interaction when it comes to money and financial planning.  They''re not depositing checks all old school and such but they're reassured by some interaction on large transactions.

[52-80 19282]

millenials are going to have the last laugh when their bitcoins go to the moon

[52-80 19282]

17 minutes ago, theCruiser said:

I see that they are engaging with professionals face-to-face as much as any other generation.  But that's in terms of accountants, investment professionals, et. al.  The idea of having to drive to a bank and wait in line because of the "relationship banking" platform the branch embraces is laughable to them though.  Branch banking is being taken out back to have two rounds put through the back of its head.  Complete fucking waste of real estate.  I'd open up another Sears before I opened up another branch bank.  

Don't overlook the value of physical brank branches.  They provide helpful advice and assistance for those who are able to visit them, from the hours of 1030am-300pm, except for 11-1pm, 4 days a week, excluding major, minor, and religious holidays.

[clapclapclap 9000]

Added a poll, to sort this all out.

Secret ballot, so you can be honest.  Or not.

Edited July 18, 2018 by clapclapclap

[DanRydell 799]

Despite 9 years of monthly payments, my students loan balance is almost 50% larger today then it was when I graduated. So yeah, can’t say I’m putting away much for retirement.

[Spaulding Smails 1568]

2 minutes ago, DanRydell said:

Despite 9 years of monthly payments, my students loan balance is almost 50% larger today then it was when I graduated. So yeah, can’t say I’m putting away much for retirement.

You should pay it off with your credit card, then pay down that balance every month...

How is that even possible?  Are you paying the minimum every month?  Only the interest?  What kind of balance are we talking about here?  I'm just trying to wrap my head around that kind of math.

[Auto Driller 2511]

So you're telling me people don't like to work AND they're bad at managing money? I'm shocked.

[TwiceHorn 31699]

3 minutes ago, DanRydell said:

Despite 9 years of monthly payments, my students loan balance is almost 50% larger today then it was when I graduated. So yeah, can’t say I’m putting away much for retirement.

How the hell does this happen?  Isn't there some kind of amortization schedule applied to student loans, if you don't get in arrears and get on that treadmill?  Variable rate, I guess?

[Capn81 388]

Older millennial here. I am docking away about 13% of each paycheck into retirement accounts, but I have no doubt that there will not be a retirement age for me or my peers. My guess is that my saved money will go to my kids, and maybe they will be able to retire when they hit their 60’s.

[TwiceHorn 31699]

1 hour ago, FondrenRoad said:

You jest, but that's probably not far off.  Farmers markets are all the rage.  As is artisanal and local everything.  Hipsters have even brought back the milkman in some places.  Eventually, they'll desire community banking again.  Gen X were bigger on abandoning community and human interaction during business transactions.

In a way that's good and great.  In another, it reflects a certain profligacy in spending.  Gen X didn't desire that, it was foisted upon them by technology.  This GenXer is quite used to it, though.

Why is it that "socially revolutionary" generations are really bad with money?  Viz:  Baby boomers and apparently, millienials.  Somewhat rhetorical question.

[Auto Driller 2511]

6 minutes ago, TwiceHorn said:

How the hell does this happen?  Isn't there some kind of amortization schedule applied to student loans, if you don't get in arrears and get on that treadmill?  Variable rate, I guess?

[Okie State 3867]

Despite 9 years of monthly payments, my students loan balance is almost 50% larger today then it was when I graduated. So yeah, can’t say I’m putting away much for retirement.

What's the long term plan here?

[Cheeseweasel 26438]

2 minutes ago, Okie State said:

15 minutes ago, DanRydell said:

Despite 9 years of monthly payments, my students loan balance is almost 50% larger today then it was when I graduated. So yeah, can’t say I’m putting away much for retirement.

What's the long term plan here?

Death?

[Bert Orange 1130]

You need to add to the poll:

the alchohol

the 1%’ers

the latter is clearly to blame

[FondrenRoad 4378]

4 minutes ago, TwiceHorn said:

In a way that's good and great.  In another, it reflects a certain profligacy in spending.  Gen X didn't desire that, it was foisted upon them by technology.  This GenXer is quite used to it, though.

Why is it that "socially revolutionary" generations are really bad with money?  Viz:  Baby boomers and apparently, millienials.  Somewhat rhetorical question.

For millennials, I think its just push back.  They live in a world where most human socialization is filtered through a device.  Its easier to change where you buy things than it is to change social practices in general.

[Trey3216 15381]

1 hour ago, 52-80 said:

millenials are going to have the last laugh when their bitcoins go to the moon

[Js1 85817]

4 minutes ago, Cheeseweasel said:

Death?

100% my plan.

Can't pay my student loans.... if I'm dead.

Edited July 18, 2018 by Js1

[Trey3216 15381]

41 minutes ago, 52-80 said:

Don't overlook the value of physical brank branches.  They provide helpful advice and assistance for those who are able to visit them, from the hours of 1030am-300pm, except for 11-1pm, 4 days a week, excluding major, minor, and religious holidays.

Don't forget Rotary, Chamber, and Humane Society meeting times...

[52-80 19282]

7 minutes ago, Okie State said:

20 minutes ago, DanRydell said:

Despite 9 years of monthly payments, my students loan balance is almost 50% larger today then it was when I graduated. So yeah, can’t say I’m putting away much for retirement.

What's the long term plan here?

die before the collections agency comes for their take.

[DanRydell 799]

What's the long term plan here?

Well, after another 16 years of payments, the balance will be forgiven. Of course, then I’ll have to figure out a way to pay the taxes on that.

[ABSR 5327]

3 hours ago, Dahobbs said:

While this thread feels like it was supposed to be a criticism of millennials, the actual report is a bit more nuanced and interesting than the cited article (surprise!):

TLDNR: More millennials want to save than previous generations, but economic conditions (e.g., the recession) have prevented them from saving. Additionally, millennials are expected to live longer AND  have lesser access to social safety nets, meaning that millennials need to save more for retirement than previous generations. 

What recession are we talking about?  Last one ended in 2009.   

 

Have they been holding out for management positions?

[Guest]

3 hours ago, SDG said:

I only want to date 10’s but reality says that isn’t going to happen.  That’s a click bait article because everyone “wants” to retire early...

This.

as I get older, my ‘target retirement year’ gets getting lower and lower.

 

That dosn’t mean it’s gonna happen.

 

Now, if the 18 Y.O. in the poll have a goal, then go out and make it happen.  37 YO? Welp, you have a much steeper hill to climb.