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

[hawkifann]

Yeah, I just wonder what the down side of the JUCO route is. Seems like everyone should do that. $6K vs $20K per year for 2 years would really help with the back end loan amount.

There are so many possible factors and it all depends on goals and aptitude. What are the career goals? Is grad school a significant goal? Where do you want to work? How much money does the family have? How much can a kid get in scholarships and grants to bring the cost down? Does the "status" of the degree matter much?

If a kid is highly motivated to be a cutting edge orthopedic surgeon or an elite entertainment lawyer/agent or become a major corporation CEO, then going to the higher end school from the start might be totally worth it - you'll be tapping into a network and certain doors will open more easily after.

If you want to live in the same area where you grew up and manage a retail store or be a teacher, then it would be idiocy to rack up 6-figure debt to come back home and do those things.

There's no one right path for everyone.

 

[SiouxCityHawkFan]

Couple things here.

My dad bought his first house at 19 years old without any postsecondary education. He got a job at a local factory. He did buy what would be deemed an entry level house in the 70's. It was built in the 40's so about 30 years old at that time.

Now, let's take that same scenario today. 19 year old gets a factory job in Eastern Iowa. Probably starts at what... $15 an hour? Let's try to find him a house to buy on a ~30k income that is about a 30 year old house that is entry level. Oh, and did I mention that my Dad's first house only cost him about 1.5 times his income?

So in our situation in today's world let's try to find a house that is about 30 years old for our 30k a year 19 year old that is no more than 45k in a larger Eastern Iowa city. And ..... GO!

Times do change. I bought my first house at 25 for 75K in 1995. Was probably double my income. I also had a 7.5% loan that no one could believe how I got such a low rate. So while homes are more interest rates are probably 1/3 of what your dad paid. In the end home ownership isn't for everyone.

 

[naturalmwa]

Is it a coincidence that most Bernie Sanders followers appear to be millennials? Seems like they live in this fantasy world where the Govt will just take care of everything for you.

We have daddy issues.

 

[hawkifann]

You mention you and your wife will have yours paid off because you have good jobs. Why would people go to college to get a bad job? That is a lousy excuse. If they went to college and have a bad job, that is on them, not society.

Not entirely. As a society we have forced a college degree to be a pre-requisite for a lot of things for which the college degree really doesn't help much. The end result is a lot more people who shouldn't be going to college to feel like they have to go.

 

[Hammer93]

Here's the thing with Room & Board, whether you go to college or not you are going to have food & housing expenses. Throwing these into college costs are a bit deceiving. A student could get a part time job and cover a lot of those R&B costs.

My loans were minimal as I paid all of my housing and food during college with 2 jobs. Totaled about 25-30 hours of work per week. 4 guys, one 2 bedroom apartment. We made it work.

 

[hawkifann]

Here's the thing with Room & Board, whether you go to college or not you are going to have food & housing expenses. Throwing these into college costs are a bit deceiving. A student could get a part time job and cover a lot of those R&B costs.

Fair point.

 

[luvmyhawks]

Yah we have our employers 401k then another mutual fund we feed money to as well. On top of that we have term on each other and got whole life to use as a super conservative vehicle to grow money. Plus with whole the way I look at it, if something does happen we will have term and whole on top of the whole being “liquid”.

In regards to the financial advisor, I read up on all this jazz before I met with one. My real good friend is a financial advisor and helped with the term and life. Also i see it as it’s also good to have Yourself surrounded by people with different skills and expertise to go to with questions.

I also started with one around 2016 because with our income levels there are ways to beat the tax system through the years and when retirement comes. But find one you trust because the wealth of knowledge they have is more than you would think and they help you maximize your returns.

This. I am a planner for Edward Jones. Someone also mentioned Wells Fargo, which is fine as well. Find an investment advisor, not an insurance sales rep. Find someone that will layout a plan for you and show you the best way to get there, not just sell you a proprietary product.

 

[hawkifann]

Not entirely. As a society we have forced a college degree to be a pre-requisite for a lot of things for which the college degree really doesn't help much. The end result is a lot more people who shouldn't be going to college to feel like they have to go.

This is also one reason why tuition has risen so much. There's a huge market of students, so schools don't have to compete as much. Someone will always pay (and since federal loans are fairly easy to get, the supply is always funded).

 

[FranklinHawk]

Yeah, I just wonder what the down side of the JUCO route is. Seems like everyone should do that. $6K vs $20K per year for 2 years would really help with the back end loan amount.

I think years ago there was always question about which courses did & didn't transfer to the 4 year school. In the case of both of my boys, when they got their AA the 4 year schools (in state) didn't even really look at a class by class basis. That's really the only thing I could think of, but again at least for us when transferring to in-state schools it was no problem.

 

[Obviously Oblivious]

tldr; - married, two kids, both of us 30, $85k in retirement.....and a millennial - and we make sub $110k gross a year.

30 here, wife 30, her school was paid for by her parents, and I attended a community college for two years, then made the mistake of going to Kaplan at nights a few years later to obtain my bachelor degree. I had 0 help with tuition, so I have a student loan balance that currently is around $14k. However, when I started my first "real" job, which was working for a large corporation, they suggested that we put 6% in our 401k to receive the max 3% match, and have it automatically increase by 1% each year.
I think, by year 2, I just put it at 10% and left it. I didn't know any better, but I was living alone in the Des Moines area, and didn't really go out a whole lot. I didn't need the money, and I'm glad now. My wife (who was given everything anyone could imagine, and didn't really start saving anything until she met me) and I are sitting with $85k or so in our retirement accounts. She gets IPERS, which is catching up to me pretty quick!

I'm curious what everyone here suggests on this - feed the Roth 401k, or limit that to get my employee match, and fund a Roth IRA instead? I'm in a bit of a different situation than most on here, and would happily get into the discussion with anyone if they are interested. If not, I'm not going to waste my time typing a whole bunch up

Never leave employer match money on the table, always maximize that IMO. Never, ever turn down free money.

 

[Obviously Oblivious]

3 pages in and not one person from any generation has said they want to work past 60. It seems like the desire to retire early isn't just an entitled millennial thing.

No one does, honestly, but I will probably work until I'm eligible for Medicare benefits because the cost of obtaining health insurance is so high otherwise it doesn't make sense to throw your liquid assets away for their promises of coverage.

 

[Jerome Silberman]

No one does, honestly, but I will probably work until I'm eligible for Medicare benefits because the cost of obtaining health insurance is so high otherwise it doesn't make sense to throw your liquid assets away for their promises of coverage.

Yup, that's my point. Nobody wants to work forever.

What's the point of spotlighting millennials when it's a fairly universal goal?

 

[Obviously Oblivious]

Yup, that's my point. Nobody wants to work forever.

What's the point of spotlighting millennials when it's a fairly universal goal?

That's a fair statement. Boomers are having to face their reality now and many don't like the looks of it. Over half of the baby boomers (~10,000 Americans a day turn 65 years old) have $100,000 or less put away for retirement. That's extremely poor financial planning IMO.

 

[Hawk_4shur]

I'm curious what everyone here suggests on this - feed the Roth 401k, or limit that to get my employee match, and fund a Roth IRA instead? I'm in a bit of a different situation than most on here, and would happily get into the discussion with anyone if they are interested. If not, I'm not going to waste my time typing a whole bunch up

I'll play. The answer depends on investment options in the 401k. If you like them, there is no reason I can think of no reason to use the IRA - it's just an extra account, maybe extra fees, etc. If you want to be able to do something with your money other than the offerings in the 401k, the using the IRA is a good choice.

Or, you could fund a regular IRA. Get some tax savings today.

Having more than one account only makes sense if you want to do something different than you do in the 401k.

 

[srams21]

I believe when he says trades, he's talking about skilled labor. Skilled labor is hurting right now and they are paying a ton more than $15 an hour depending on what the trade skill is.

Right but he was responding to my post implying that the same thing can happen in today's world that I laid out in my post. It can't or is highly unlikely.

 

[srams21]

Times do change. I bought my first house at 25 for 75K in 1995. Was probably double my income. I also had a 7.5% loan that no one could believe how I got such a low rate. So while homes are more interest rates are probably 1/3 of what your dad paid. In the end home ownership isn't for everyone.

Sure but the point remains.

Home ownership was much easier back in the day. Again, a 19 year old unskilled laborer isn't purchasing homes in today's economy.

 

[What Would Jesus Do?]

Most have nothing saved. I continue to be embarrassed that I am a millennial, as the ones in their younger 20's don't seem to have a clue. Now we see why things like universal income are gaining popularity.

View embedded media

Millennials are in their 20s and 30s. What's so surprising that most don't have much saved?

Drudge Report. SMH. I mean, slightly better than FOX, but still....

 

[SiouxCityHawkFan]

Sure but the point remains.

Home ownership was much easier back in the day. Again, a 19 year old unskilled laborer isn't purchasing homes in today's economy.

I would suspect you are correct about unskilled 19 year olds ability to purchase a home today. I would guess most 19 year olds today and even in your dads day had no desire to or had even considered buying a home. I sure didnt in 1990 when I was 19. And now with so many more attending college it seems less likely it is under consideration. Home ownership in America is at 64% in 1960 it was 62.1. Doesn't seem like a lot of change overall.

 

[GarryO37]

Right but he was responding to my post implying that the same thing can happen in today's world that I laid out in my post. It can't or is highly unlikely.

Sorry. I didn't read the last bit. You're correct. You aren't going to find a house for 45k given those conditions.

That's not his point either though. Let's take a 19 year old kid who learns a trade like pipe fitting. Not including overtime, on average a pipe fitter can earn 56k a year. Throw in overtime because no pipe fitter works just 40 hours a week, and a pipe fitter can easily earn 80k a year.

Do you think he can easily find a house for 120k?

Or even using your scenario. How about both parents working and earning 35k a year? Do you think they can find a house for 105k?

You guys are both correct.

 

[SoDakHawk]

IMO you would be much better off just investing in a broad range of index funds through your 401K. Most advisors charge around 1.5% up to 500K and around 1% above that. You may, and I say may, need one starting a few years before you retire, depending on how much you have learned about investing during that time period. 1 or 2% doesn't sound like much but over the years it cost you hundreds of thousands of dollars.

It's all about accumulation until you approach retirement. Just throwing as much money as possible into low cost index funds is not a bad way to go. Be aggressive and trust the market to give you returns over the long term.

The one area I think we could all use help in is which investment vehicles to use and how much should we put in each. How much in qualified money like IRA's and 401k's vs Roth IRA's vs non-qualified funds like a straight brokerage account. The tax implications of withdrawing from (or dying while in possession of) different investment vehicles can be huge. That's not even getting into things like real estate and other such investments.

 

[SoDakHawk]

3 pages in and not one person from any generation has said they want to work past 60. It seems like the desire to retire early isn't just an entitled millennial thing.

I could retire at 60 but will probably work until 62 and maybe 67. Depends on what happens with social security in the future. Will I rely on social security? No, obviously not, but it will have an effect on when I retire. Cannot count on it being there but also cannot ignore it while planning. 45 years old and have paid into SS all my life, I'd opt out today if I could redirect my and my employer contributions into something self directed and self owned.

 

[srams21]

Sorry. I didn't read the last bit. You're correct. You aren't going to find a house for 45k given those conditions.

That's not his point either though. Let's take a 19 year old kid who learns a trade like pipe fitting. Not including overtime, on average a pipe fitter can earn 56k a year. Throw in overtime because no pipe fitter works just 40 hours a week, and a pipe fitter can easily earn 80k a year.

Do you think he can easily find a house for 120k?

Or even using your scenario. How about both parents working and earning 35k a year? Do you think they can find a house for 105k?

You guys are both correct.

That makes sense.

I'm not familiar with the pipe fitting trade but aren't most people coming into trades apprentices and therefore probably not making near that much? I have no idea what an apprentice would make.

That being said, in your example, I think finding a 120k house in most parts of Eastern Iowa (Iowa City being the one exclusion) would be doable I think. 105k would be a bit tougher just looking at listings for the larger cities in Eastern Iowa (CR, QCA, Dubuque, and Waterloo) assuming you don't want a complete craphole of a house. I am assuming just a basic starter home here btw.

 

[srams21]

I would suspect you are correct about unskilled 19 year olds ability to purchase a home today. I would guess most 19 year olds today and even in your dads day had no desire to or had even considered buying a home. I sure didnt in 1990 when I was 19. And now with so many more attending college it seems less likely it is under consideration. Home ownership in America is at 64% in 1960 it was 62.1. Doesn't seem like a lot of change overall.

That's true.

I also suspect that most people today buy more home than they can afford. That is true of all generations.

My dad's generation always had a rule of thumb of spending no more than 1.5 to 2 times your household income on a mortgage. That is the rule we have followed and it really works well.

Now though I hear people all the time say the rule of thumb is 3 to 3.5 times your income. That would make me extremely nervous.

 

[Hammer93]

That makes sense.

I'm not familiar with the pipe fitting trade but aren't most people coming into trades apprentices and therefore probably not making near that much? I have no idea what an apprentice would make.

That being said, in your example, I think finding a 120k house in most parts of Eastern Iowa (Iowa City being the one exclusion) would be doable I think. 105k would be a bit tougher just looking at listings for the larger cities in Eastern Iowa (CR, QCA, Dubuque, and Waterloo) assuming you don't want a complete craphole of a house. I am assuming just a basic starter home here btw.

I think you are pretty accurate there. I do think that getting 30 minutes outside of any of those areas would result in finding really good starter home in those price ranges listed.

 

[whatsup13579er]

That's true.

I also suspect that most people today buy more home than they can afford. That is true of all generations.

My dad's generation always had a rule of thumb of spending no more than 1.5 to 2 times your household income on a mortgage. That is the rule we have followed and it really works well.

Now though I hear people all the time say the rule of thumb is 3 to 3.5 times your income. That would make me extremely nervous.

The debt ratios lenders use to make mortgage decisions are very liberal. Lots of people become house poor. My no pic wife would be house poor in a second and her no pic mom is a lender. IDK how many times I've heard her say we should be able to afford $XXX house and my response is well you'd better love that house because we wouldn't be able to do anything else.

 

[Old_wrestling_fan]

That makes sense.

I'm not familiar with the pipe fitting trade but aren't most people coming into trades apprentices and therefore probably not making near that much? I have no idea what an apprentice would make.

That being said, in your example, I think finding a 120k house in most parts of Eastern Iowa (Iowa City being the one exclusion) would be doable I think. 105k would be a bit tougher just looking at listings for the larger cities in Eastern Iowa (CR, QCA, Dubuque, and Waterloo) assuming you don't want a complete craphole of a house. I am assuming just a basic starter home here btw.

A pipe fitter would normally start as an apprentice and be in the $15/hr range to start, but with benefits on top of that, including 100% heath care coverage. An apprentice would normally have a 5 year apprenticeship and receive wage increases roughly every 6 months and at the end of the apprenticeship, be in the $40/hr range. Not bad, not bad at all, especially since you will have also incurred no debt along the way. It's a pretty good gig.

 

[Herkster5]

Never leave employer match money on the table, always maximize that IMO. Never, ever turn down free money.

Correct, never would. That was my old job that had the match, my new job has a 3% safe harbor contribution, which you get regardless of how much, or how little you contribute to the work plan.

I'll play. The answer depends on investment options in the 401k. If you like them, there is no reason I can think of no reason to use the IRA - it's just an extra account, maybe extra fees, etc. If you want to be able to do something with your money other than the offerings in the 401k, the using the IRA is a good choice.

Or, you could fund a regular IRA. Get some tax savings today.

Having more than one account only makes sense if you want to do something different than you do in the 401k.

I opened the Roth IRA because I wanted to roll my old employers 401k into it, and now am just debating on which one to fund first. Plus, with 2 kids, 1 more coming in 6 weeks, our "cash" is tight. We are typically cash poor, in a sense, but I'm not going to stop investing just to have an extra $100 to play with every month. And by cash poor, we really aren't poor. We buy what we want, more than we should, and still survive just fine. Just need to tighten the ole belt down in the near future. 3 kids in daycare is going to be hard on the pocket book, but it's not expensive enough for one of us to stay home full time.

 

[unIowa]

That's true.

I also suspect that most people today buy more home than they can afford. That is true of all generations.

My dad's generation always had a rule of thumb of spending no more than 1.5 to 2 times your household income on a mortgage. That is the rule we have followed and it really works well.

Now though I hear people all the time say the rule of thumb is 3 to 3.5 times your income. That would make me extremely nervous.

There have been new financial insturments in real estate lending that your dad didn't have access to that has changed that equation, like the low/no money down 30 year mtg. I agree with following your dad's rule of thumb as that is what we have always down but most certainly do not but things are not quite apples to apples from that time either.

 

[Randy Marsh]

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

I would start at reddit.com/r/financial independence. They have a flowchart on where to put your money. I’m guessing you’re not at the point where a financial planner makes sense, most people aren’t. Follow their chart and then if you still aren’t sure, maybe at that point consult a pro (make sure they are fee only, not commissioned).

Note: Someone else may have addressed this already but I’m a couple pages behind in the thread.

 

[srams21]

There have been new financial insturments in real estate lending that your dad didn't have access to that has changed that equation, like the low/no money down 30 year mtg. I agree with following your dad's rule of thumb as that is what we have always down but most certainly do not but things are not quite apples to apples from that time either.

Getting a mortgage loan with no money down is crazy. If you can't even put 5% down on a house, maybe you can't afford that house.

 

[hawkedoff]

I think average student loan debt at Iowa is something like a 20-25k average debt load. That isn't exactly all that terrible.

 

[Randy Marsh]

Correct, never would. That was my old job that had the match, my new job has a 3% safe harbor contribution, which you get regardless of how much, or how little you contribute to the work plan.



I opened the Roth IRA because I wanted to roll my old employers 401k into it, and now am just debating on which one to fund first. Plus, with 2 kids, 1 more coming in 6 weeks, our "cash" is tight. We are typically cash poor, in a sense, but I'm not going to stop investing just to have an extra $100 to play with every month. And by cash poor, we really aren't poor. We buy what we want, more than we should, and still survive just fine. Just need to tighten the ole belt down in the near future. 3 kids in daycare is going to be hard on the pocket book, but it's not expensive enough for one of us to stay home full time.

I have my employers 401k that I get the match and then a RothIRA through Vanguard. My 401k has fees around 1%+ through American Funds and Vanguard’s VTSAX fund (US stock exposure) has an expense ratio of 0.04%. The international fund is 0.11% and the bond fund is 0.05%.

So I fund my 401k to max my employers match. Then I fund an IRA for my wife and one for myself through Vanguard, then maxing a HSA before circling back to max out my 401k.

 

[Mattski]

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.

This nails it.
We have a younger couple in our neighborhood, on occasion they've bitched about both still having big loans and how hard it makes things. She drives a Denali and he drives a loaded Silverado and their house is in the high 300s.
I paid my college debt off in just over 5 yrs by my wife and I choosing to live in a nice little 150k house and I drove a 10yr old Mercury sable and my wife drove a bit newer but still very used Mazda 6. We actually waited until we had zero debt before we bought our next house and slowly upgraded vehicles over time. Life is about choices,l... unless you're a spoiled brat who is used to always getting what you want when you want it. Unfortunately we have more of these types now than ever before.

 

[Smalls4IA]

Most have nothing saved because of student loan debt. Hard to put money away when your student loans are at 6% and you owe $100,000+ for a four year degree.

Must be nice to ruin the country like the Boomers have done and continue to do while blaming everyone else for the problems they created.

Oh, and they were the parents of these terrible millennials.

Explain to me how someone goes to state colleges and ends up with over $100,000 in debt. Ironic you speak of blaming others. Also, if you're too stupid to figure out your profession isn't going to make going to college with it you deserve what you get.

 

[GarryO37]

That makes sense.

I'm not familiar with the pipe fitting trade but aren't most people coming into trades apprentices and therefore probably not making near that much? I have no idea what an apprentice would make.

That being said, in your example, I think finding a 120k house in most parts of Eastern Iowa (Iowa City being the one exclusion) would be doable I think. 105k would be a bit tougher just looking at listings for the larger cities in Eastern Iowa (CR, QCA, Dubuque, and Waterloo) assuming you don't want a complete craphole of a house. I am assuming just a basic starter home here btw.

I'm not sure, but I assume so. My brother seemingly got right into pipe fitting so I would have to ask him. I have some iron worker friends and their apprenticeship was 3 years if I remember correctly.

It's doable depending on your standard of living. But I agree with you. These things are significantly more difficult nowadays than they were back then.

 

[hawkedoff]

Sure but the point remains.

Home ownership was much easier back in the day. Again, a 19 year old unskilled laborer isn't purchasing homes in today's economy.

I would start at reddit.com/r/financial independence. They have a flowchart on where to put your money. I’m guessing you’re not at the point where a financial planner makes sense, most people aren’t. Follow their chart and then if you still aren’t sure, maybe at that point consult a pro (make sure they are fee only, not commissioned).

Note: Someone else may have addressed this already but I’m a couple pages behind in the thread.

There isn't really such a thing as a fee only planner. There are planners that charge fees though. Go with the planner that is transparent on their fees. Lots of people get hung up on the commission thing when they should instead be looking directly at the honesty thing. A good planner should get paid. If they are simply shoving you into mutual funds or some other product how much of a planner are they really?

 

[hawkifann]

Explain to me how someone goes to state colleges and ends up with over $100,000 in debt. Ironic you speak of blaming others. Also, if you're too stupid to figure out your profession isn't going to make going to college with it you deserve what you get.

It all depends on how you're using loan money. If you're working or have assistance or savings, you can probably cover a chunk of your living expenses. If not, you can get there. I just looked up UNC as an in-state since I live in Charlotte. $8,500 for tuition per year for in-state. Let's assume $2,500 in fees and books on top. That's "school", $10-12k. Assume 5 years. There will also be $12-15k in living expenses. As others have pointed out, you have that either way unless you're still in mom's basement because you have to live somewhere, whether you're working or in school. If you're taking loans to cover living expenses, too, then that's another $60k+ over 5 years....and boom, you're over $100k over 5 years.

 

[Smalls4IA]

Explain to me how someone goes to state colleges and ends up with over $100,000 in debt. Ironic you speak of blaming others. Also, if you're too stupid to figure out your profession isn't going to make going to college with it you deserve what you get.

It all depends on how you're using loan money. If you're working or have assistance or savings, you can probably cover a chunk of your living expenses. If not, you can get there. I just looked up UNC as an in-state since I live in Charlotte. $8,500 for tuition per year for in-state. Let's assume $2,500 in fees and books on top. That's "school", $10-12k. Assume 5 years. There will also be $12-15k in living expenses. As others have pointed out, you have that either way unless you're still in mom's basement because you have to live somewhere, whether you're working or in school. If you're taking loans to cover living expenses, too, then that's another $60k+ over 5 years....and boom, you're over $100k over 5 years.

If you choose not to work you have nothing to complain about that's on you. It also probably says a lot about your work ethic as well and why you can't find a job that pays your bills. There's no excuse for not working and accumulating debt unless your studies require it in which case you should have no problem repaying it later.

 

[hawkifann]

If you choose not to work you have nothing to complain about that's on you. It also probably says a lot about your work ethic as well and why you can't find a job that pays your bills. There's no excuse for not working and accumulating debt unless your studies require it in which case you should have no problem repaying it later.

I wasn't making a pro or con judgment on it or trying to sell anyone as a victim. You simply asked someone to explain how you get a $100k debt going to state school. Boom. Delivered.

 

[Smalls4IA]

If you choose not to work you have nothing to complain about that's on you. It also probably says a lot about your work ethic as well and why you can't find a job that pays your bills. There's no excuse for not working and accumulating debt unless your studies require it in which case you should have no problem repaying it later.

I wasn't making a pro or con judgment on it or trying to sell anyone as a victim. You simply asked someone to explain how you get a $100k debt going to state school. Boom. Delivered.

I hope you understand that everybody here already knew that would be the answer. Simply wanted to see some idiot try and explain how they have it so rough by being required to work while going to school. Or how they chose to go to a private college and are played $30k plus a year.