The average/median salary for millenials is between $25-40k (the statistics I see vary significantly). I imagine that this article is basically a proxy for the poor wages millenials typically have.
I'm a young millenial in a low cost city in Texas with a retirement account balance over the average by quite a bit. If you have the money to max your accounts every year, its very easy. And I've already bought and sold a house while I maxed out my accounts.
> In my circles, everyone from 25-35 is simultaneously preparing to FIRE and no-one that's 35+ has actually changed jobs despite being 'financially independent'.
Even among my anecdotal very-highly-compensated NYC tech-salary coworkers and friends, having money issues and easily sub $100k net worths is way more common than not.
> Most have less than $20,000 but some have much more. The average account balance is $67,891
It is amazing that the median is under $20k and the average is nearly $70k. This means there are some folks with very large retirement savings that are pulling the average up a lot. Considering this only includes folks up to age 32, this is really surprising. How much do these savers have socked away?
Even when I worked in a big law firm, I didn't put that much in my retirement account because I was mostly saving to be able to buy a house (in the Bay Area). I can't imagine who these millennials are that have so much in a retirement account — presumably they also live in expensive areas if they are able to earn so much?
Edit: Glad to see all the responses, including from folks who have healthy retirement accounts. It would be great if you could share where you live and whether you have bought or are planning to buy a home.
no millennials expect to see a dime of social security income (whether or not this is justified is another question), nor do they have any plans to retire because the prospect of having enough money to do so is simply unrealistic for them.
i am not the only one that has put their income, expenses, and savings rate into one of those "financial independence" calculators (http://mustachecalc.com/#/calcs/time-to-fi). i found that my predicted retirement age was in my 130s if i was willing to settle for a very modest retirement with a lower standard of living than i currently have.
that's right: i'm roughly 100 years from having enough money to retire, even if i save perfectly diligently every single month from now until then, which is extremely unlikely. it doesn't even make sense to plan for because i won't live that long; the calculation doesn't include anything along the lines of medical debt which is sure to accrue in old age if not sooner. the calculator may or may not be accurate to the decade, but it's accurate to the half-century in any event. if it's inaccurate by a half century in my favor, that still puts me as retiring in my late 80s -- hardly much more to look forward to.
i am always harping on the same thing: 6.5% interest rate student loans, rising rent, rising living costs, lower income, rising healthcare costs, shrinking benefits, and no social safety net to speak of have totally devastated the economic prospects of a generation.
the first plans to be thrown out the window during economic insecurity are the ones which are farthest away timewise. most people haven't had a chance to even plan that far in the first place. by the time they have accumulated enough resources to start saving some each month, they may be forced to take care of their then-elderly parents, or, alternatively, their children -- which most people can't afford anyway. so much for building up savings.
to be clear, it isn't "work" that has failed us. it's capitalism.
Hell of a lot of "ifs" and assertions here. IF you can get a 100k job at age 21 and IF you can save 30% per year (which us a lot) and IF nothing goes wrong with your health, company failing, being laid off, etc etc.
It's highly, highly unrealistic to assume 21 year olds earning 100K AND saving 30% of it, have you met many 21 year olds?
I was just writing a blog post about this, that people basically just find new ways to consume all the money they earn so that they're always on the edge. And a lot of people who make $40k scoff at the idea that they would still be scraping by at $140k, but lots of people go from making $40k in their 20's to $140k in their 40's and basically nobody retires comfortably in their 50's because $140k a year provided them with so much extra money. Rather, 50-somethings work just as much or more, they just tend to have much more expensive houses, cars, and hobbies than 20 year olds, and they still put just 4% of their income toward retirement, if they're careful.
Interesting! Now I wonder why this is. Could it be age brackets being stretched? That's just off the top of my head, but I'd be very interested to hear people who know about these kinds of things.
Also: How do those "FIRE" millenials manage to retire at 30? By living WELL below their means. It's no a lifestyle for everybody, but it demonstrates that money skills can be learned.
What the article doesn't really mention is future earning potential. $40K doesn't look bad when you are 19, but if you are late 30s with a house and kids and are still doing physical work and a 3 hour commute everyday it doesn't look so good.
Not just millennials. I'm late 40s and factoring medical expenses into retirement (over a decade off still) planning is the thing I'm most uncertain about.
I'm 35 and for the most part like many software engineers relatively well off so I'm probably myopic of the full situation but here is what I have noticed differently among peers 5 to 10 years younger than me (that are often developers as well)..... they don't seem to mind not having wealth.
When I was college as an intern I opened a Roth IRA and put my earnings into it (I was fortunate to go a relatively cost effective school). I was absolutely afraid I was going to retire with no money.
When I got out of college my first goal was to buy a two family or something I could rent and live in. Which I eventually did waiting for the market to tank. I negotiated for raises or position title changes as often as I could. I absolutely was completely focused on provincially building wealth... people of similar age to me were equally concerned.
I can't say the same for folks 5-10 years younger (I'm not saying there aren't wealth focused millennials.. I just haven't met many yet). For example one individual I know went to Europe out of college used some parents money for as long as possible and then eventually came back home (the thought of asking my parents for money makes me uncomfortable).
I somewhat admire the guts it takes to not worry about the future like that and live life (and this is coming from someone who left a job and started a company).
So by retirement a 20 year old starter on $50k (a little low) should expect to be on $200k by age 30 (which I accept isn't at all impossible for a smart kid), and retire on around $12.8 million a year....
I'm clearly doing something wrong, or the job market here in the UK is a lot more different than in the US than I assumed.
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