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

[hawkifann]

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.

Life is all about choices and there are consequences for those decisions. I'm paying on a grad school loan I racked up 15 years ago....so be it, the tradeoff has been fantastic and I'd take the same loans again (although the rates would be much worse).

 

[luvmyhawks]

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.

Your goal is, and should be, to max out both when you can. Doesn’t matter which one you use first, just make yourself a plan to be putting $18500 in the employer plan as well as the $5500 in the ira. Based on your age, income, etc...... with 3 kids, you really probably should not be deferring any taxes right now. Anyway, that is probably more than I really should even be saying. Highly regulated industry.

 

[luvmyhawks]

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.

Again, investments are one small tiny little aspect of my job. The easiest part actually. My fees range from .5% - 1.25% I am worth every penny of it.

I don’t come across to many late 20, early 30 year olds with 100k plus already. Kudos to you guys that have that. I would argue that people with money like that would benefit from talking to a planner for tax purposes and future tax planning sooner rather than later, but to the extent you use their services is hard to say. Most of your money is tied up in an employer plan, so you may just pay them a one time fee of $250/$500 to put together a plan for you, then it is up to you to stick with it until you need them to be more involved.

That’s all I got. Hope it helps.

 

[Herkster5]

Your goal is, and should be, to max out both when you can. Doesn’t matter which one you use first, just make yourself a plan to be putting $18500 in the employer plan as well as the $5500 in the ira. Based on your age, income, etc...... with 3 kids, you really probably should not be deferring any taxes right now. Anyway, that is probably more than I really should even be saying. Highly regulated industry.

Roth is after tax, right? So I'm not deffering any taxes, I don't have anything in a traditional 401k or IRA, both are Roth.
And yes, the goal should certainly be to max both out, I understand that

 

[The_Gent]

We just need more tax breaks for the obscenely wealthy.

And big government to inefficiently spend our money. Both of those have been awesome for the economy. Conservatives need to actually be conservative again.

 

[JMNSHO]

I recently heard on NPR, (marketplace I think) that millennials are saving at a higher rate than Boomers or Xers, so I'm not sure how that fits into ops narrative or the rest of what I assume is the shitshow of this thread that I did not read.

 

[luvmyhawks]

Roth is after tax, right? So I'm not deffering any taxes, I don't have anything in a traditional 401k or IRA, both are Roth.
And yes, the goal should certainly be to max both out, I understand that

Nice. You will be very happy with that decision down the road. As far as your first question goes about which one to contribute to. It really depends how much you have right now. If you are still in early stages, just grow that rothk as much as you can for the time being. you are young, be aggressive with it. Investment options are typically better in an ira, so as you are growing wealth, you will want to utilize the ira more.

 

[Herkster5]

I've got 37k in my Roth IRA (rolled over from a Roth 401k from past employer) and 23k in my current Roth 401k (wife has IPERS, need to open her an IRA...).

Both in target date funds, because I don't have the knowledge to make the investment choices myself. Fees are pretty low in both plans, if I'm remembering correctly, which I might not be. I think we're doing ok for 30 in a super low cost of living location.

 

[claykenny]

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.

This has been truth for a while. But, the “you have to go to college to get a good job” narrative is strong.

My brother is a plumber. Minimal debt. Frequently turning down jobs because he’s too busy. Can’t find good, reliable help to expand his business.

 

[UKGrad93]

Herkster5's on his way to being a fat cat.

My 401k is negative.

 

[strummingram]

And big government to inefficiently spend our money. Both of those have been awesome for the economy. Conservatives need to actually be conservative again.

Here's my definition of Liberal and Conservative.

Liberal is more likely to go forward, to progress, to be ambitious about the unknown.

Conservative is more likely to stay with what is already in place and very unlikely to do anything any different than what already exists. Conservative is much more cautious and fearful of the unknown.

Now, every person has some of both traits in themselves.

 

[claykenny]

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.

I had $500,000 in student loan debt, once all the interest was factored in.

Not everyone goes to state universities. Not everyone lives in an affordable place like Iowa.

 

[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.

I had $500,000 in student loan debt, once all the interest was factored in.

Not everyone goes to state universities. Not everyone lives in an affordable place like Iowa.

Not everyone is very smart.

 

[claykenny]

Not everyone is very smart.

Are you suggesting I’m not smart?

 

[Smalls4IA]

Not everyone is very smart.

Are you suggesting I’m not smart?

Not at all unless you chose to pay that much money to go into a profession that won't pay out. Like a doctor or a lawyer.

 

[hawkifann]

I recently heard on NPR, (marketplace I think) that millennials are saving at a higher rate than Boomers or Xers, so I'm not sure how that fits into ops narrative or the rest of what I assume is the shitshow of this thread that I did not read.

Yep, they're doing a solid job. Overall numbers are low, but it's because we're including 18-25 yos who are still in school or just getting started in life. That's a solid third right there who I'd expect, on the whole, to have little or nothing socked for retirement.

 

[86Hawkeye]

Skyrocketing tuition, housing prices, health care costs, stagnant wages...gee.

iPhones, flat screen TVs, gaming systems....gee.

 

[hawkifann]

iPhones, flat screen TVs, gaming systems....gee.

Ok, let's look at this, though. You're a 23-24 year-old who is either coming out of college and entering the work force or you're coming out of apprenticeship in the trades or something. You get a place.....can a grown adult in today's world function without a cell phone? I'd argue no. This isn't 2004 when every place had a land line and some people were starting to get cell phones for convenience. Now, as for the higher end phones, there's some argument there, but there's also a pretty healthy market for used iPhones and high-end Androids.

You also throw in "flat screen TVs" as if they're some high-end luxury. They're a luxury in the sense that nobody needs TV to live, but on the whole, it's pretty cheap entertainment.....and good luck finding one that's not "flat-screen".

Some of this stuff is the "start-up" cost of adulthood. When you're living at home or in the dorms, you generally have a lot of things simply because of those arrangements. Dorms will give you a bed and a desk. You live at home, there's some level of furniture there that parents have presumably provided. Move out and get your own place and that comes with a need to get some "stuff". Depending on who (if anyone) you're living with and what they have, you may need furniture, a bed, dishes, towels, sheets, small appliances, a TV, etc. Might even need a car. A kid in that scenario probably shouldn't spend $20k on that stuff, but it can be a good amount of spend in a pretty short time and then, from there, you start to accumulate stuff in life like everyone else.

I lay that out not to be all "poor Millennials, what a challenge", but rather to point out that every generation has "start-up costs" to living on your own. It's something they have to budget for, but it's the kind of thing that generally prevents people just starting out from doing things like maxing IRA/401k contributions......but it's temporary. So the Millennials are currently 18-37. Kids in school or scraping buy on entry-level work simply aren't going to have retirement savings yet. Get into your mid-20s and you're still in the "start-up" phase. Hopefully at that age, they're starting to put money away, but savings levels will be low. Then you move on and hopefully get a lot done in the later 20s and 30s. It's life. I'm Gen X and went through the same stuff. I was no expert at those ages and I'm sure I didn't make optimal moves, but wife (no pics) and I went through grad school during the early part of our marriage and some of the better income came later.

 

[joelbc1]

The one constant in life is......my grandmother worried about it for her kids, my parents worried about it with us boys and we boys worry about it with our kids and grandkids....the one constant we all worry about is.....” how will our children make it because everything costs so much!” Well, the answer is we will manage. As long as there is employment, decent jobs and a fair rate of inflation, we will all survive and prosper.

 

[unIowa]

The one constant in life is......my grandmother worried about it for her kids, my parents worried about it with us boys and we boys worry about it with our kids and grandkids....the one constant we all worry about is.....” how will our children make it because everything costs so much!” Well, the answer is we will manage. As long as there is employment, decent jobs and a fair rate of inflation, we will all survive and prosper.

The thing is in some areas there hasn't been a "fair rate of inflation" at all but rather an introduction of additional easy to access liquidity and more creative financing tools to make these things (education, homes, cars to a certain extent) seem more affordable. Unfortunately the mass increase in available funding and the extending out of financing options has only created a snowball effect on these higher inflationary rates.

It is such a "good intentions" gone bad outcome yet we have so many that are unwilling to admit or even acknowledge it. There are two ways to help bring these inflationary rates down: 1. Price Fixing via govt intervention (not good) 2. Winding down some of the cheap and easy govt funding programs thus creating downward pricing pressures via the supply and demand curve relationship in these areas (not ideal either as it will create a negative wealth effect for many and slow economic growth)...I guess there is a 3rd option as well, use technology to dramatically reduce the expense outlays for some of these items (this would fundamentally change the college experience and/or put more workers on the sideline via automation efforts).

 

[Hawk_82]

Ok, let's look at this, though. You're a 23-24 year-old who is either coming out of college and entering the work force or you're coming out of apprenticeship in the trades or something. You get a place.....can a grown adult in today's world function without a cell phone? I'd argue no. This isn't 2004 when every place had a land line and some people were starting to get cell phones for convenience. Now, as for the higher end phones, there's some argument there, but there's also a pretty healthy market for used iPhones and high-end Androids.

You also throw in "flat screen TVs" as if they're some high-end luxury. They're a luxury in the sense that nobody needs TV to live, but on the whole, it's pretty cheap entertainment.....and good luck finding one that's not "flat-screen".

Some of this stuff is the "start-up" cost of adulthood. When you're living at home or in the dorms, you generally have a lot of things simply because of those arrangements. Dorms will give you a bed and a desk. You live at home, there's some level of furniture there that parents have presumably provided. Move out and get your own place and that comes with a need to get some "stuff". Depending on who (if anyone) you're living with and what they have, you may need furniture, a bed, dishes, towels, sheets, small appliances, a TV, etc. Might even need a car. A kid in that scenario probably shouldn't spend $20k on that stuff, but it can be a good amount of spend in a pretty short time and then, from there, you start to accumulate stuff in life like everyone else.

I lay that out not to be all "poor Millennials, what a challenge", but rather to point out that every generation has "start-up costs" to living on your own. It's something they have to budget for, but it's the kind of thing that generally prevents people just starting out from doing things like maxing IRA/401k contributions......but it's temporary. So the Millennials are currently 18-37. Kids in school or scraping buy on entry-level work simply aren't going to have retirement savings yet. Get into your mid-20s and you're still in the "start-up" phase. Hopefully at that age, they're starting to put money away, but savings levels will be low. Then you move on and hopefully get a lot done in the later 20s and 30s. It's life. I'm Gen X and went through the same stuff. I was no expert at those ages and I'm sure I didn't make optimal moves, but wife (no pics) and I went through grad school during the early part of our marriage and some of the better income came later.

You mentioned all these things, but most people are willing to give away many of these items for pennies on the dollar. check Facebook garage sales, Craigslist, Goodwill. We all need a bed, but we don't need a matching hardwood bedroom set at 22. You can get by for a long time with cheap stuff.

The way to become rich is by making saving a priority. This means maxing out your Roth before buying a new TV, bed, furniture etc. it means waiting a few extra years to buy a house so you can continue to fund retirement.

There will always be hurdles in life that you can use as excuses to not save. Rich people find a way to save despite the hurdles.

Delaying gratification is a very hard thing to do, but in the long run it pays off. If you can delay gratification for a few years you will have a fully funded retirement, plus you can still afford all the cool things, only you get them at 30 instead of 22

https://www.psychologytoday.com/us/...er/201712/the-benefits-delaying-gratification

 

[hawkifann]

You mentioned all these things, but most people are willing to give away many of these items for pennies on the dollar. check Facebook garage sales, Craigslist, Goodwill. We all need a bed, but we don't need a matching hardwood bedroom set at 22. You can get by for a long time with cheap stuff.

The way to become rich is by making saving a priority. This means maxing out your Roth before buying a new TV, bed, furniture etc. it means waiting a few extra years to buy a house so you can continue to fund retirement.

There will always be hurdles in life that you can use as excuses to not save. Rich people find a way to save despite the hurdles.

Delaying gratification is a very hard thing to do, but in the long run it pays off. If you can delay gratification for a few years you will have a fully funded retirement, plus you can still afford all the cool things, only you get them at 30 instead of 22

https://www.psychologytoday.com/us/...er/201712/the-benefits-delaying-gratification

I never said a word about buying fancy stuff. I simply pointed out that the first time you move out into your own place is one of the few times in life when there's some level of "need" to buy a bunch of stuff all at once. There's delayed gratification and then there's getting stuff like sheets, towels, a basic bed, some cheap furniture, a TV, some cooking tools and dishes/silverware without stringing it all out of the course of a year. You can do that all in a couple months and still have some room left for savings, but part of the story in OP was people having no savings and little savings. Savings is something that ramps up.

I've delayed gratification.....but when I moved into my own place, I didn't get a bed one month, towels the next, then a couple plates, then some pans, sheets 6 months later.....no, there's a bunch of crap you have to get all at once, and it's one of the few times in your life when that happens.

 

[whatsup13579er]

Does the employer match count against your maximum contribution to your retirement plan?

 

[Hawk_82]

I never said a word about buying fancy stuff. I simply pointed out that the first time you move out into your own place is one of the few times in life when there's some level of "need" to buy a bunch of stuff all at once. There's delayed gratification and then there's getting stuff like sheets, towels, a basic bed, some cheap furniture, a TV, some cooking tools and dishes/silverware without stringing it all out of the course of a year. You can do that all in a couple months and still have some room left for savings, but part of the story in OP was people having no savings and little savings. Savings is something that ramps up.

I've delayed gratification.....but when I moved into my own place, I didn't get a bed one month, towels the next, then a couple plates, then some pans, sheets 6 months later.....no, there's a bunch of crap you have to get all at once, and it's one of the few times in your life when that happens.

So what do you think is a reasonable amount to spend furnishing a first time apartment or home.

These are also expenses that don't exactly creep up on you. You know that you will need these things 18 years in advance. A wise person will start acquiring things a year or more in advance to minimize the hit to the budget. Or at the least start saving money money to put towards furnishing a home.

The majority of these expenses should be planned and budgeted for. They should not be coming out of the regular monthly budget.

 

[hawkifann]

So what do you think is a reasonable amount to spend furnishing a first time apartment or home.

These are also expenses that don't exactly creep up on you. You know that you will need these things 18 years in advance. A wise person will start acquiring things a year or more in advance to minimize the hit to the budget. Or at the least start saving money money to put towards furnishing a home.

The majority of these expenses should be planned and budgeted for. They should not be coming out of the regular monthly budget.

Of course, but it's still initial outlay. There will also be things they don't need Day 1 in an apartment that start getting budgeted for so that as the first year goes on they can get other things they find they want/need....and all this when you're hopefully making the least money you're ever going to make.

I'm not trying to say it's impossible, everything is just tighter. I was saving money from Day 1, but when you look at the "what you should have" savings for retirement, I was always lagging behind until my mid/late 30s. Now in my mid 40s, I'm fine. It's life.

I really started this line when 86Hawkeye threw in "iPhones" and "flatscreen TVs". There's more to it than that and things like cellphones aren't really optional anymore, you just have to make sure you're buying a phone that fits your budget....whether it's a cheaper brand new phone or a used iPhone/Samsung.

 

[Randy Marsh]

Does the employer match count against your maximum contribution to your retirement plan?

No.

 

[aflachawk]

We already have universal income for retirement. And people scream about socialism.

well yes but I paid in over 48 years

 

[BrunoMars420]

well yes but I paid in over 48 years

Imagine taking that money that you paid in to social security and using it for your own target mutual fund? Think about how much money you would have in that compared to ssi?

Anyone under 35 should want to have the option to opt out of this program.

 

[SoDakHawk]

Imagine taking that money that you paid in to social security and using it for your own target mutual fund? Think about how much money you would have in that compared to ssi?

Anyone under 35 should want to have the option to opt out of this program.

Oh no you don't. GWB had a plan to privatize social security and slowly phase it out. There was a partial opt-out provision for those 35 or younger. That was back in 2000 and was targeted at us Gen X'ers. We would have greatly benefited from that. Obviously, it did not go anywhere once the Greatest Generation and their Boomer kids got done with putting a stop to it.

Now that almost 20 years have passed you aren't going to pull that BS on us X'ers now that we've had to pay into SS our whole lives. It's time for the Millennials to pay in now and keep this house of cards going.

 

[BrunoMars420]

Oh no you don't. GWB had a plan to privatize social security and slowly phase it out. There was a partial opt-out provision for those 35 or younger. That was back in 2000 and was targeted at us Gen X'ers. We would have greatly benefited from that. Obviously, it did not go anywhere once the Greatest Generation and their Boomer kids got done with putting a stop to it.

Now that almost 20 years have passed you aren't going to pull that BS on us X'ers now that we've had to pay into SS our whole lives. It's time for the Millennials to pay in now and keep this house of cards going.

Why keep something that is going to fail going forward when we can phase it out and help America in the future with the opt out provision?

 

[luvmyhawks]

I've got 37k in my Roth IRA (rolled over from a Roth 401k from past employer) and 23k in my current Roth 401k (wife has IPERS, need to open her an IRA...).

Both in target date funds, because I don't have the knowledge to make the investment choices myself. Fees are pretty low in both plans, if I'm remembering correctly, which I might not be. I think we're doing ok for 30 in a super low cost of living location.

I think you are doing excellent. And it is all tax free. Bravo.

 

[luvmyhawks]

Why keep something that is going to fail going forward when we can phase it out and help America in the future with the opt out provision?

That's not the way this works. Us X'ers are now paying for boomers retirement. Why should we get screwed over? The next generation, my kids, will be paying for yours. We have now paid into this shit show for 20+ years. No backing down now.

 

[BrunoMars420]

That's not the way this works. Us X'ers are now paying for boomers retirement. Why should we get screwed over? The next generation, my kids, will be paying for yours. We have now paid into this shit show for 20+ years. No backing down now.

Sounds like we need to have a war of ideas in the debate dome to resolve this issue in regards to social security

 

[joelbc1]

Imagine taking that money that you paid in to social security and using it for your own target mutual fund? Think about how much money you would have in that compared to ssi?

Anyone under 35 should want to have the option to opt out of this program.

No they should not. All in.
What folks under 35 need to understand Bruno is that it is NOT all about them.
Bruno...you taking notes? The government is giving you a gift to protect your investment and your ability to invest. Take it.

 

[joelbc1]

The thing is in some areas there hasn't been a "fair rate of inflation" at all but rather an introduction of additional easy to access liquidity and more creative financing tools to make these things (education, homes, cars to a certain extent) seem more affordable. Unfortunately the mass increase in available funding and the extending out of financing options has only created a snowball effect on these higher inflationary rates.
If you want I can be cold....I learned early that fools and their money are soon parted...that is one thing capitalism does. You gotta be smart.
It is such a "good intentions" gone bad outcome yet we have so many that are unwilling to admit or even acknowledge it. There are two ways to help bring these inflationary rates down: 1. Price Fixing via govt intervention (not good) 2. Winding down some of the cheap and easy govt funding programs thus creating downward pricing pressures via the supply and demand curve relationship in these areas (not ideal either as it will create a negative wealth effect for many and slow economic growth)
Without inflation, any growth would be negligible. Inflation certainly is overrated as being a bad thing. It is a necessary evil. ...I guess there is a 3rd option as well, use technology to dramatically reduce the expense outlays for some of these items (this would fundamentally change the college experience and/or put more workers on the sideline via automation efforts).
These decisions are a necessary part of the capitalistic system. Those in the marketplace need to wisely make decisions on how there money is spent. College is NOT for everyone. Post HS job training....perhaps tuition free, might be a better use of money and education.

 

[BrunoMars420]

No they should not. All in.
What folks under 35 need to understand Bruno is that it is NOT all about them.
Bruno...you taking notes? The government is giving you a gift to protect your investment and your ability to invest. Take it.

I would rather have the gift of freedom to do what I want with my own money. I don’t need the government to protect me from my risks I want to take.

 

[FranklinHawk]

I would rather have the gift of freedom to do what I want with my own money. I don’t need the government to protect me from my risks I want to take.

Actually both sides are right. If you are young and invested what you put into SS the return would be exponentially greater, if you're old and have been paying into SS for years you need the next generation to keep paying.

 

[joelbc1]

I would rather have the gift of freedom to do what I want with my own money. I don’t need the government to protect me from my risks I want to take.

Ir doesn't. However, "the government" (we the people) also want to give you your investment in America back with interest and SS provides that avenue. SS and SSI five Americans the dignity to live as Americans.
Honestly Bruno, you need to gain some life perspective and make an effort to understand what it takes to make a society function successfully. I fail to comprehend why a young kid like you feels they are so important as opposed to others and need not to work for a greater common good.

 

[luvmyhawks]

Ir doesn't. However, "the government" (we the people) also want to give you your investment in America back with interest and SS provides that avenue. SS and SSI five Americans the dignity to live as Americans.
Honestly Bruno, you need to gain some life perspective and make an effort to understand what it takes to make a society function successfully. I fail to comprehend why a young kid like you feels they are so important as opposed to others and need not to work for a greater common good.

Because he is 30. It is the same exact way we all thought when we were 30. Just like he will feel the exact same way we all do when he is 40, 50, and even more importantly, when you are receiving your income from ssa every single month.

 

[BrunoMars420]

Because he is 30. It is the same exact way we all thought when we were 30. Just like he will feel the exact same way we all do when he is 40, 50, and even more importantly, when you are receiving your income from ssa every single month.

I doubt I ever use my ssi.

I am going to do my damn best to make sure I don’t fall in line with the boomers on how to not save for retirement.

Unfortunately my utopian America prolly won’t happen. So let me offer you this, I get to choose by the time I near retirement on if I can take it as a monthly income, give it back to the ssi fund, or take a lump sum and choose to give it to a non profit, charity, or governmental agency I want. Since I am giving it away and I never notice it, give me the freedom to do as I please with it once my time comes. I would rather put it back into the school/education in my community so I can see it put to work rather than have a measley 1200 a month from ssi.

Do you guys support that way of handeling an individuals ssi? Giving me the choice in Being able to see it put to use in the community I live in?

@joelbc1