Millennials Want To Retire By 61, One Problem...

[GarryO37]

If millennials aren’t saving for retirement, it’s the result of lazy parenting by previous generations. Maybe you should have done a better job raising millennials and stressing the importance of actually saving for retirement instead of complaining about them.

Now, while the cost of living has increased and wages have not kept up, it’s still not hard to save for retirement. Even with student debt, anything is better than nothing and start early.

 

[BrunoMars420]

I’m a millennial and plan on retiring at 59.5.

I’m 30 and my wife and I have around 126k saved away for retirement right now. According to estimates I should have 4.5 mil by the time I am 59.5 and this is not counting the savings we will have through the years and the equity I will have built into my home.

 

[unIowa]

The fact is that the growth of the guaranteed federal student loan programs is one of the major catalyst for these skyrocketing college inflationary rates. Unless you are a science denier the. I guess you can believe whatever you want.

I'm not denying that. It is certainly a factor. I still think state funding is the biggest factor but yes you make a good point.

Easy and cheap capital, IMO, is the biggest reason and there are lots of good articles and studies showing the impact of easy money to rising inflationary rates.

Other similarly funded area is mortgages which is why we have seen such high inflation in this area as well.

https://www.google.com/amp/s/www.fo...unlimited-student-loans-drive-up-tuition/amp/

https://www.zerohedge.com/sites/def...5/imageroot/2014/05/Federal Student Loans.jpg

 

[HallofFame]

I’ve been out of college a little over 10 years now. 2005 to be exact. I left Iowa with $30,000 in loans. Is it really over 100k for four years now?

 

[unIowa]

I’ve been out of college a little over 10 years now. 2005 to be exact. I left Iowa with $30,000 in loans. Is it really over 100k for four years now?

In 2008 a massive increase in student loan funding was made available and prices went bonkers shortly there after.

I went to UNI, graduated in 2000, 4 years, $22k in student loans.

 

[srams21]

I’m a millennial and plan on retiring at 59.5.

I’m 30 and my wife and I have around 126k saved away for retirement right now. According to estimates I should have 4.5 mil by the time I am 59.5 and this is not counting the savings we will have through the years and the equity I will have built into my home.

We are actually in a very similar situation. Like eerily similar.

Hoping to retire by 55 or 60 at the latest. Healthcare/ health insurance will be the tricky part but that is 30 years away.

 

[CelticHawk]

I’ve been out of college a little over 10 years now. 2005 to be exact. I left Iowa with $30,000 in loans. Is it really over 100k for four years now?

State funded robbery.

 

[HallofFame]

State funded robbery.

Tuition, books, fees are around 11k a year. Where is the other $14,000 coming from?

 

[naturalmwa]

Tuition, books, fees are around 11k a year. Where is the other $14,000 coming from?

Nice apartment and beer.

 

[CelticHawk]

Tuition, books, fees are around 11k a year. Where is the other $14,000 coming from?

How is the growth in that area?

 

[HallofFame]

Nice apartment and beer.

Can kids not work? I had 3 jobs in college and full time job for two of them. I see no reason to have more than $40-$50k in loans for a Liberal Arts 4 year degree.

 

[HallofFame]

How is the growth in that area?

Huh?

 

[CelticHawk]

Huh?

Don't duck the question. And I will add this, the QC is free of state charity money. We are true Dem Capitalist.

 

[HallofFame]

Don't duck the question. And I will add this, the QC is free of state charity money. We are true Dem Capitalist.

What question did you ask me?

 

[hawkifann]

Can kids not work? I had 3 jobs in college and full time job for two of them. I see no reason to have more than $40-$50k in loans for a Liberal Arts 4 year degree.

Current cost of attending Iowa (in state, per year):

Tuition: $7,128
Books: $950
Other fees: $1,447
Room & Board: $10,108

That's a total of almost $20K. Rental rates in IC aren't likely to get you much cheaper than dorm costs as you age up. Do that for four years and you're looking at $80k. It may not all be loans if you saved some in HS, worked in college or got money from the parents, but at $80K+, how much are you really going to make as an unskilled 18-22yo? $10/hr? Do most kids work full time? I didn't. I had jobs all through college paying various amounts, but I wasn't working 40 hours+ per week.

 

[CelticHawk]

Current cost of attending Iowa (in state, per year):

Tuition: $7,128
Books: $950
Other fees: $1,447
Room & Board: $10,108

That's a total of almost $20K. Rental rates in IC aren't likely to get you much cheaper than dorm costs as you age up. Do that for four years and you're looking at $80k. It may not all be loans if you saved some in HS, worked in college or got money from the parents, but at $80K+, how much are you really going to make as an unskilled 18-22yo? $10/hr? Do most kids work full time? I didn't. I had jobs all through college paying various amounts, but I wasn't working 40 hours+ per week.

This might be the hippy in me, but we need the campus bus to pick up more kids at camp grounds. And in the winter time, they will always find a home. But, if we do that, rich assholes cant make money.

 

[HallofFame]

Current cost of attending Iowa (in state, per year):

Tuition: $7,128
Books: $950
Other fees: $1,447
Room & Board: $10,108

That's a total of almost $20K. Rental rates in IC aren't likely to get you much cheaper than dorm costs as you age up. Do that for four years and you're looking at $80k. It may not all be loans if you saved some in HS, worked in college or got money from the parents, but at $80K+, how much are you really going to make as an unskilled 18-22yo? $10/hr? Do most kids work full time? I didn't. I had jobs all through college paying various amounts, but I wasn't working 40 hours+ per week.

I worked 40 hours a week right out of high school making 20k a year. As a full time student. Did that freshman and sophomore years before stopping the one full time job. Then I stated to get jobs in my field of study. Three jobs the last two years making less but better experience. Just admit partying living close to the bars and spending rather freely is what makes college so expensive. It isn’t that hard to get through school with a responsible small loan. For a basic Liberal Arts degree. Highly specialized
fields I get the higher loans. Mine only hit 30k because my dad got cancer and couldn’t work for a year so I borrowed more to help him. Then the next year my mom got a nasty divorce and I helped her. You could have worked a full time job but chose not to and that’s fine I don’t fault you for that. But you worked for beer money probably and that wasn’t my thing. Without helping my parents I would have had half the loans I have. College is pricey agreed but a lot of it is just the personal attitude of meh. I’ll pay for it later. End rant/csb

 

[hawkifann]

I worked 40 hours a week right out of high school making 20k a year. As a full time student. Did that freshman and sophomore years before stopping the one full time job. Then I stated to get jobs in my field of study. Three jobs the last two years making less but better experience. Just admit partying living close to the bars and spending rather freely is what makes college so expensive. It isn’t that hard to get through school with a responsible small loan. For a basic Liberal Arts degree. Highly specialized
fields I get the higher loans. Mine only hit 30k because my dad got cancer and couldn’t work for a year so I borrowed more to help him. Then the next year my mom got a nasty divorce and I helped her. You could have worked a full time job but chose not to and that’s fine I don’t fault you for that. But you worked for beer money probably and that wasn’t my thing. Without helping my parents I would have had half the loans I have. College is pricey agreed but a lot of it is just the personal attitude of meh. I’ll pay for it later. End rant/csb

You and I went to college at different times, I would guess. I was fortunate that my parents were able to help me out in undergrad. I went to Iowa from fall 1992-fall 1996. My first semester at Iowa, tuition was $1,044 and room & board was $3,500. Tuition + room & board was less than $10k for one year. I'm sorry about your dad's cancer, but I'd have only ever hit $30k in student loans in college if I'd have taken loans for basically every penny spent.

For the record, I still have student loans. I got out of undergrad with no debt, but I went to Drexel for grad school in 2000-2003 for a masters in IS. I left that program with about $55k in student loans. I'm down to about $29k that I could pay off, but I was fortunate enough to be able to lock them in at 2.8%, so I'll pay them off when I pay them off.

People CAN bust their a$$es and work full time or multiple part-time jobs, but the pay for that level of employment has not changed nearly as much in the last 20 years as the cost of college.

 

[luvmyhawks]

Well, and we also need to factor in age. Millennials are, as defined in the article, 18-37. At what point would you expect substantial savings? Anyone going to college likely isn't even going to start saving much until they're 24-25....and if they go to grad school, later than that. Then factor in the cost of college (tuition as an in-state student at Iowa my first semester was just over $1,000, now it's probably 10-12x that). There's a cost of getting started in life, as well.

Assuming a roughly equal distribution from 18-37, I'd actually expect that a solid 35-50% likely won't have much savings simply due to their age and position in life. Add on top the stupidity of youth and the numbers in the story aren't really surprising at all. Probably could have written the same story for Gen Xers as well 20 years ago. I'm on track for a good retirement (maybe even early if things break right) and we didn't have much until I was hitting my mid-30s due to grad school, a career change and kids. Good basic habits, though, put us in a good position for the point where promotions and new opportunities mean significantly more income.

That's how life works for a lot of people. Maybe the Millennials will prove to be fiscal morons, but right now I think there's a lot of generational piling on. Let's give them a chance. At some point, they will rule the world.

Great post. Not sure why this is even an issue or topic. Most millennials are just reaching a point where saving for retirement is even doable. They will be fine.

 

[lucas80]

I love how everybody is crying about student loan debt. I have student loan debt and in a few short months it will be 100% paid off. It's called hard work and paying your bills. It only took me 10 years roughly.

I didn't go out and have 120K in student loan debt with a major in gender studies.

I doubt you have a degree, and my working theory is you are a woman. Gender studies would have been good for you to study.

 

[lucas80]

You won’t if the high tax and free goodies crowd gets their way...they will need you to keep producing.

Right now the slash taxes and balloon spending crowd in DC is more damaging than leftists like me.

 

[hawkifann]

Great post. Not sure why this is even an issue or topic. Most millennials are just reaching a point where saving for retirement is even doable. They will be fine.

Maybe not "fine", but as a whole, I don't think they'll be substantially worse off than any other generation. As a society, I don't think we do a great job of saving for a lot of different reasons. I don't know that Millennials will be "fine", but on the whole, they likely won't be that much different than Gen X.

 

[Hawk_82]

The student loan debt excuse is growing old.

Yes tuition is expensive and probably even over priced. But you chose your major, you chose your post graduate job, etc. I'm not going to feel sorry for your bad decisions.

Maybe you should have picked a better major and you would not have it so rough.

I also see people driving nice cars, wearing expensive clothes, smoking cigs, going on vacations etc. And then complaining about their student loans.

I can't wait until these see 0eople have to send their kids to daycare and realize that it costs $1000 plus per kid.

 

[Hawk_82]

Current cost of attending Iowa (in state, per year):

Tuition: $7,128
Books: $950
Other fees: $1,447
Room & Board: $10,108

That's a total of almost $20K. Rental rates in IC aren't likely to get you much cheaper than dorm costs as you age up. Do that for four years and you're looking at $80k. It may not all be loans if you saved some in HS, worked in college or got money from the parents, but at $80K+, how much are you really going to make as an unskilled 18-22yo? $10/hr? Do most kids work full time? I didn't. I had jobs all through college paying various amounts, but I wasn't working 40 hours+ per week.

Kids need to get a job and stop wasting their money.

I worked 20 hrs per week for 4 years. If I made 10 dollars an hour, even today that would have cut student loans in half.

We just need to teach better money management skills. First is to only borrow what you need. Don't go on a $5000 vacation during college and finance this through student loans. Don't buy a new car until loans are paid off. Don't finance your bar habit..

It sucks paying interest on a vacation you took 10 years ago.

Oh yeah, if you truly can't afford college then maybe go to a junior college or work really hard and get schlorships. Don't get married right out of college and have a $30,000 wedding with a 2 week honeymoon.

Very few people are strapped with excessive college debt if they actually planned ahead and used their money wisely. Too many parents and kids think college is a free for all and you need to just enjoy your time... Well there are consequences for this behavior.

 

[prlyles]

The fact is that the growth of the guaranteed federal student loan programs is one of the major catalyst for these skyrocketing college inflationary rates. Unless you are a science denier the. I guess you can believe whatever you want.

I’m surprised it took this long for someone to say this obvious fact

 

[prlyles]

I’m a millennial and plan on retiring at 59.5.

I’m 30 and my wife and I have around 126k saved away for retirement right now. According to estimates I should have 4.5 mil by the time I am 59.5 and this is not counting the savings we will have through the years and the equity I will have built into my home.

That’s the biggest mistake young people make. The earlier you start the more Father Time will pay you.

 

[StormHawk42]

No matter which side of the line you fall on, I think we can all agree that basic money management needs to be taught in HS. I know I didn’t fully understand interest, mortgages, or basic 401k terms when I was that age. I didn’t even really understand the stock market until I was out of law school.

Learned my lesson eventually but I would agree there are a large chunk of millenials that still don’t understand these things and that is a big challenge.

 

[FranklinHawk]

Tuition, books, fees are around 11k a year. Where is the other $14,000 coming from?

Yeah, I think that $100K thing gets thrown around a lot. My youngest graduated in '17 and tuition, books, lodging, etc. were right around $15K/yr. Are these people not even getting summer jobs to leave with $100K in debt??

 

[markfromj]

Amen sister. Times have changed.

No they haven’t.

 

[SotaHawk87]

I love how everybody is crying about student loan debt. I have student loan debt and in a few short months it will be 100% paid off. It's called hard work and paying your bills. It only took me 10 years roughly.

I didn't go out and have 120K in student loan debt with a major in gender studies.

Yes but this is the generation that was never taught that decisions have consequences.

 

[SotaHawk87]

The cost dynamics have changed in such a way that many would be much better off with a career in the trades. We have some shortages already and more coming in those areas so they will be ripe with opportunity for very good paying jobs and business opportunities.

Carpet guy down the street pays his guys 85 effing grand to lay carpet because he can't find anybody. Said it has hurt his retirement but he doesnt care he loves what he does.

 

[CJ Beat Hard]

I’m a millennial and plan on retiring at 59.5.

I’m 30 and my wife and I have around 126k saved away for retirement right now. According to estimates I should have 4.5 mil by the time I am 59.5 and this is not counting the savings we will have through the years and the equity I will have built into my home.

Question for you:
My wife and I are in similar positions. 28 y/o with roughly $120K in 401K combined. Only debt is the house. Goal is to retire before or at 60. Have you worked with a financial planner or anyone, or just socking things away on your own at this point? Trying to decide at what age/time in life is a good time to begin talking and working with one

 

[SotaHawk87]

Anybody who makes $17 an hour and lives responsibly can retire with 1 million dollars. So much of these things are about peoples choices and entitlement to things..

 

[SotaHawk87]

Question for you:
My wife and I are in similar positions. 28 y/o with roughly $120K in 401K combined. Only debt is the house. Goal is to retire before or at 60. Have you worked with a financial planner or anyone, or just socking things away on your own at this point? Trying to decide at what age/time in life is a good time to begin talking and working with one

We are! He saved us on a huge mistake that I thought would help us in the long run. The taxes can always be tricky but in my opinion they're pretty helpful.

 

[hawkifann]

Kids need to get a job and stop wasting their money.

I worked 20 hrs per week for 4 years. If I made 10 dollars an hour, even today that would have cut student loans in half.

We just need to teach better money management skills. First is to only borrow what you need. Don't go on a $5000 vacation during college and finance this through student loans. Don't buy a new car until loans are paid off. Don't finance your bar habit..

It sucks paying interest on a vacation you took 10 years ago.

Oh yeah, if you truly can't afford college then maybe go to a junior college or work really hard and get schlorships. Don't get married right out of college and have a $30,000 wedding with a 2 week honeymoon.

Very few people are strapped with excessive college debt if they actually planned ahead and used their money wisely. Too many parents and kids think college is a free for all and you need to just enjoy your time... Well there are consequences for this behavior.

I agree with the above completely. Also, while I'm a big believer in education, college isn't for everyone and I'm not wild about how we've almost made the 4-year degree high school, part 2. We need to do a better job with career education and not setting a bar where every entry-level office job requires a bachelor's degree.

My biggest point with the OP's article, really, is that they're playing the percentages of millennials with no retirement savings. When the age group is 18-37, the outcome should be obvious. Even those in this thread who worked their tails off in college to keep student loans down weren't likely to also be socking away major retirement savings. When you're in your 20s and early 30s, you're in the early stages of your career. Money management or not, there's, on average, a lot less to work with than when a worker is in his/her 40s and 50s.

I do think we've made some big strides the last 10-15 years in the retirement space. I like the emphasis companies are putting on it and I like some of the tools where you can set yourself for an annual contribution increase that happens around the same time as annual raises - you contribute more, but the extra comes out of money you weren't making the previous year, so you don't really miss it. My current employer matches up to 6%, so obviously I started at 6% when I had daycare costs, was more house poor and made less. I guess my % still goes up, but I'm now maxing out my 401k, so it doesn't really matter.

 

[Hammer93]

We could get back to this type of model if people were ok with lesser facilities, smaller enrollment numbers and a higher hurdle of entry into the college ranks.

A serious question...how would having less kids go to college make the universities operate better financially? I guess I would think the more kids that go to college and pay tuition would result in the college being able to run more financially stable.

 

[unIowa]

We could get back to this type of model if people were ok with lesser facilities, smaller enrollment numbers and a higher hurdle of entry into the college ranks.

A serious question...how would having less kids go to college make the universities operate better financially? I guess I would think the more kids that go to college and pay tuition would result in the college being able to run more financially stable.

Less kids means the state would be able to directly fund a larger portion of their tuition to reduce their burden. It also means the state, via this funding, would have more price control(s) vs today’s model of funding.

Other posters have made good points on state funding levels as a percentage of total funding but my guess is dollar funding levels have increased over that same period of time it is just that the pace of cost increase has resulted in the total state contributions (in Iowa) moving from 70% to 30%. When cheap, easy and guaranteed govt credit was introduced as a mass funding source for students universities saw they could raise tuitions without recourse (and direct and overhead costs to help up enrollment) and the states saw it as an opportunity to hold their dollar contributions in place and not worrying about funding XYZ percentage.

 

[srams21]

Yes but this is the generation that was never taught that decisions have consequences.

I don't think this is unique to this generation.

Contrary to popular belief, Baby boomers are terrible savers.

According to recent surveys, About 30% of the people over age 55 claimed to have no retirement savings. An additional 26% reported less than $50,000 saved for retirement.

Also this:

A 2016 survey by the Transamerica Center for Retirement Studies finds that baby boomers—those born between 1946 and 1964—have median retirement savings of $147,000.

That isn't going to last long in retirement.

 

[hydro2.0]

Maybe kids should start at a comm college.

Like 4,000 a year.

 

[hawkifann]

Anybody who makes $17 an hour and lives responsibly can retire with 1 million dollars. So much of these things are about peoples choices and entitlement to things..

This is another place where we do a horrific job in society. Your above point is correct. We don't do a very good job teaching people what it means to retire with X amount of money. Your $17/hr example starts someone out around $35-40k per year. Let's say they never deviate from their career path other than some promotions/growth and maybe they retire making $50-60k per year and they have a million dollars saved. Assuming 4% earnings in retirement and 3% inflation plus Social Security, that person would have around $40k annually to live on without starting to deplete the savings. For those talking about retiring early, make sure you bump your target up enough that you can do what you're hoping to do in retirement.....most people don't look forward to early retirement so that they can live on the bare minimums, usually they're going to want to do their hobbies and travel, which takes more cash. Also, if you retire early, then presumably your money has to last longer

Let's assume life expectancy of 85 years. Retire at 65 and you need to cover 20 years. The person with $1 million in above could live on $50k and still be in good shape for 20 years (ending balance would be in the $700k range), but if that same person wanted to retire at 55 with the $1 million, they'd have to limit themselves to the $40k per year.

The other thing we do as a society is sort of hint at these larger retirement savings goals and then talk about people who have a couple million dollars as the evil rich. On the one hand, we want people to save towards retirement and all that and on the other, we vilify those who do and actually have the net worth. We want a society where the majority of 60 year olds are millionaires and multi-millionaires.