Some positive news: Millennials are doing at better saving for retirement

[Exterous]

We've known for a while that a lot of people just go with the default option since that requires the least amount of work - opt out works better than opt in. So in some brighter news early Millennials are farther along in terms of saving for retirement than earlier generations were at the same age. 60% of employers who use Vanguard are now auto enrolling employees in the plan unless they opt-out which is up from just 10% in 2006. They're also largely putting people in target date funds which are a great low effort fund and is also a change from when the default was a low yield money market account. A lot of the plans are also slowly increasing how much their participants are contributing a year - usually around a 1% increase.

As a result, “the retirement savings picture is getting stronger with each passing generation,” said Fiona Greig, global head of investor research and policy at Vanguard Group

This auto enrollment of pre-tax income is also allowing this improvement despite a heavier student loan debt burden. While this doesn't solve every financial issue facing us it is nice to see a positive trend for once

https://archive.ph/RzWHq

 

[Amused]

"Millennials are doing at better saving for retirement"

Wut?
​

 

[Brainonska511]

"Millennials" are also between their mid-20s and early 40s, so that's also not too surprising that as people get older, they start to get better about saving.

 

[Exterous]

"Millennials" are also between their mid-20s and early 40s, so that's also not too surprising that as people get older, they start to get better about saving.

They're doing better than the previous generations were doing at the same age which is the better news

 

[fskimospy]

If memory serves the main issue here is that while retirement savings may be higher, net wealth is considerably lower because millennials have in many cases been priced out of housing markets and/or carry considerably larger student debt loads than prior generations.

 

[DAPUNISHER]

If memory serves the main issue here is that while retirement savings may be higher, net wealth is considerably lower because millennials have in many cases been priced out of housing markets and/or carry considerably larger student debt loads than prior generations.

This.

The only reason they are ahead of previous generations is that it is auto enrollment and incentivized with the employer match. It is why many don't opt out. Some companies require as long as 3 years to be fully vested and keep that money though. Seems like another way to try to anchor you to that job. Stay X years or lose those contributions we made to your retirement, along with your health care.

 

[Zorba]

This.

The only reason they are ahead of previous generations is that it is auto enrollment and incentivized with the employer match. It is why many don't opt out. Some companies require as long as 3 years to be fully vested and keep that money though. Seems like another way to try to anchor you to that job. Stay X years or lose those contributions we made to your retirement, along with your health care.

Safe harbor 401k should become required, which includes immediate vesting.

 

[DAPUNISHER]

Safe harbor 401k should become required, which includes immediate vesting.

I would like them to not be able to tax the money ever. Not when it's put in, not when it's taken out.

They are going to screw the kids out of the social safety nets if they get their way. If 401k is the crappy replacement, it needs to be better than it is now tax wise.

 

[Brainonska511]

I would like them to not be able to tax the money ever. Not when it's put in, not when it's taken out.

They are going to screw the kids out of the social safety nets if they get their way. If 401k is the crappy replacement, it needs to be better than it is now tax wise.

Eh, paying taxes at some point is fine. We live in a society and taxes pay for stuff. No need to create an even more unequal system where more well off people can shelter even more income (after all, you have to be doing fairly well to be able to set aside enough to hit the 401k contribution cap every year).

 

[DAPUNISHER]

Eh, paying taxes at some point is fine. We live in a society and taxes pay for stuff. No need to create an even more unequal system where more well off people can shelter even more income (after all, you have to be doing fairly well to be able to set aside enough to hit the 401k contribution cap every year).

Here's an idea - tax the rich instead.

 

[Brainonska511]

Here's an idea - tax the rich instead.

Yes, very rich people should also be taxed. But let's not kid ourselves, if you're making 200k (ie, people that should have no problem maxing 401k) or more, you're doing quite well (maybe you don't see yourself as "rich"), and can certainly afford to pay taxes. You can't just shift all of society's tax burden onto a single group.

And then we also let all the gains in a 401k accumulate tax free, and then only require minimum annual withdrawals come retirement that may be taxed at a low rate, depending on how much you have to withdraw anyway.

 

[Hans Gruber]

We need to create a fake currency like Bitcoin. Run it up and pay off all debts for everybody.

 

[Sunburn74]

Yes, very rich people should also be taxed. But let's not kid ourselves, if you're making 200k (ie, people that should have no problem maxing 401k) or more, you're doing quite well (maybe you don't see yourself as "rich"), and can certainly afford to pay taxes. You can't just shift all of society's tax burden onto a single group.

And then we also let all the gains in a 401k accumulate tax free, and then only require minimum annual withdrawals come retirement that may be taxed at a low rate, depending on how much you have to withdraw anyway.

200K is today is like 70K 15 years ago... 200K today isn't really a whole lot of money imo considering whats happened with inflation, housing, and student debt.

 

[Fenixgoon]

200K is today is like 70K 15 years ago... 200K today isn't really a whole lot of money imo considering whats happened with inflation, housing, and student debt.

Right. 200k isn't enough money that you can buy whatever the hell you want (sorry no $500M yacht) but your living quite comfortably on that in just about any part of the country.

 

[Brainonska511]

200K is today is like 70K 15 years ago... 200K today isn't really a whole lot of money imo considering whats happened with inflation, housing, and student debt.

$70k 15 years ago is like $98k today, not $200k. People making $200k are doing well anywhere in the US, unless they choose to live in the most expensive neighborhoods of the most expensive cities.

 

[Zor Prime]

I think Fidelity might be doing the automatic 1% increase also and you have to opt not to do that otherwise yeah it is automatic.

Target dated funds are better than nothing but someone would be much better served at least in their early years with a SP500 matching fund. Vanguard has a killer one in VIIIX. Fidelity has FXAIX. And others. Super-low expense ratios. If you're not retiring anytime soon you'll survive the dips, just don't retire when things are falling apart.

Sadly it can be hard to get through to some people with investing. I had my oldest kid all mapped out and projected to retire in their 40s / 50s. But hey, they couldn't be bothered. They'll regret that. Not my life, tho.

 

[Sunburn74]

Right. 200k isn't enough money that you can buy whatever the hell you want (sorry no $500M yacht) but your living quite comfortably on that in just about any part of the country.

$70k 15 years ago is like $98k today, not $200k. People making $200k are doing well anywhere in the US, unless they choose to live in the most expensive neighborhoods of the most expensive cities.

I disagree.

$1 in 1990 → 2022 | Inflation Calculator

The 2.55% inflation rate means $1 in 1990 is equivalent to $2.24 in 2022. This inflation calculator uses the official US consumer price index.

www.officialdata.org

A dollar today has the same purchasing power as $2.24 in 1990. I remember when gas was a dollar a gallon in my early 20s around the 1990s. Now its 5 dollars a gallon where I live. Coffee used to be a dollar a cup, now its like 4-5 dollars. Houses used to be 100K, now they are 400-500K for a middle class home (I remember looking at a house 4 years ago when I was shopping for one. The house in the nicest neighborhood of my town was bought was 140K in 1990 or so. They sold it for >800K the year I was buying and thought an offer of 750K was a joke)

200K USD pre-tax today is effectively about 89,000 USD dollars pre-tax in 1990. It's not a lot of money today. Its probably a solid lower middle class. I remember reading about families in silicon valley who were struggling with rent and had no housing prospects whilst making 200K combined a few years ago. I think its a bit hard to raise a family of 2-3 on just effectively 90K a year (pre tax!). Take away 30% for tax and its like 60K a year post-tax...not very impressive or comfortable at all if you ask me.

 

[Brainonska511]

I disagree.

$1 in 1990 → 2022 | Inflation Calculator

The 2.55% inflation rate means $1 in 1990 is equivalent to $2.24 in 2022. This inflation calculator uses the official US consumer price index.

www.officialdata.org

A dollar today has the same purchasing power as $2.24 in 1990. I remember when gas was a dollar a gallon in my early 20s around the 1990s. Now its 5 dollars a gallon where I live. Coffee used to be a dollar a cup, now its like 4-5 dollars. Houses used to be 100K, now they are 400-500K for a middle class home (I remember looking at a house 4 years ago when I was shopping for one. The house in the nicest neighborhood of my town was bought was 140K in 1990 or so. They sold it for >800K the year I was buying and thought an offer of 750K was a joke)

200K USD pre-tax today is effectively about 89,000 USD dollars pre-tax in 1990. It's not a lot of money today. Its probably a solid lower middle class. I remember reading about families in silicon valley who were struggling with rent and had no housing prospects whilst making 200K combined a few years ago. I think its a bit hard to raise a family of 2-3 on just effectively 90K a year (pre tax!). Take away 30% for tax and its like 60K a year post-tax...not very impressive or comfortable at all if you ask me.

You just moved the goal posts. You said 15 years ago, not 33 years ago.

200K is today is like 70K 15 years ago... 200K today isn't really a whole lot of money imo considering whats happened with inflation, housing, and student debt.

---

Anyway, gas prices are pretty flat or lower, if adjusted for inflation:


I don't know where you're buying coffee at $5 a cup. Starbucks and other coffee shops are usually around $3 for a cup of coffee. More if you want fancier things.

The only thing really driving up costs for most people is housing, and that's because we've dramatically underbuilt housing in the places people want to live for the last 30 years. Color me shocked that increasing population without increasing housing has lead to a supply pinch that has driven prices through the roof. We only allow people to build luxury single family homes and literally ban building anything denser, and then act all shocked that housing prices have gone up.

Regardless, if you're making $200k/year, you are doing perfectly fine, even in some of the most expensive metros. I can personally attest to this. I'm not at that amount yet in my career, but close enough for the sake of argument: my wife (in school) and I (full time job) comfortably rent in an expensive metro area, max out my 401k and other retirement vehicles, and have plenty left over for necessities, future savings for whatever, and luxury purchases.

 

[Fenixgoon]

I disagree.

$1 in 1990 → 2022 | Inflation Calculator

The 2.55% inflation rate means $1 in 1990 is equivalent to $2.24 in 2022. This inflation calculator uses the official US consumer price index.

www.officialdata.org

A dollar today has the same purchasing power as $2.24 in 1990. I remember when gas was a dollar a gallon in my early 20s around the 1990s. Now its 5 dollars a gallon where I live. Coffee used to be a dollar a cup, now its like 4-5 dollars. Houses used to be 100K, now they are 400-500K for a middle class home (I remember looking at a house 4 years ago when I was shopping for one. The house in the nicest neighborhood of my town was bought was 140K in 1990 or so. They sold it for >800K the year I was buying and thought an offer of 750K was a joke)

200K USD pre-tax today is effectively about 89,000 USD dollars pre-tax in 1990. It's not a lot of money today. Its probably a solid lower middle class. I remember reading about families in silicon valley who were struggling with rent and had no housing prospects whilst making 200K combined a few years ago. I think its a bit hard to raise a family of 2-3 on just effectively 90K a year (pre tax!). Take away 30% for tax and its like 60K a year post-tax...not very impressive or comfortable at all if you ask me.

the middle class is literally the median, or 50th percentile. median household income (50th percentile) in the US today is $75k, so that's our middle. and let's give a +- 10 or 20k buffer, so 55k is lower mid and 95k is upper mid. 200k would be the 95th percentile. solidly upper class. now, it's not F-U money that we all think of when we think of upper class. that's the 1%(~500k) and really, the 0.1% or the 0.01% where the real crazy money is.

but basically, you aren't worrying about any necessities. if you're pulling that kind of coin, chances are you are set for housing, food, transportation, medical needs. you're able to invest for the future (both yours and any children). you have money for hobbies and trips.

and what this really puts in perspective is just how bad minimum wage, or even slightly above that, is. fed minimum is still 7.25/hr or 15,000 a year. assume a two-worker household, and that's 30k/year, or well under half of the median income.

 

[Sunburn74]

You just moved the goal posts. You said 15 years ago, not 33 years ago.

---

Anyway, gas prices are pretty flat or lower, if adjusted for inflation:
View attachment 86754

I don't know where you're buying coffee at $5 a cup. Starbucks and other coffee shops are usually around $3 for a cup of coffee. More if you want fancier things.

The only thing really driving up costs for most people is housing, and that's because we've dramatically underbuilt housing in the places people want to live for the last 30 years. Color me shocked that increasing population without increasing housing has lead to a supply pinch that has driven prices through the roof. We only allow people to build luxury single family homes and literally ban building anything denser, and then act all shocked that housing prices have gone up.

Regardless, if you're making $200k/year, you are doing perfectly fine, even in some of the most expensive metros. I can personally attest to this. I'm not at that amount yet in my career, but close enough for the sake of argument: my wife (in school) and I (full time job) comfortably rent in an expensive metro area, max out my 401k and other retirement vehicles, and have plenty left over for necessities, future savings for whatever, and luxury purchases.

I did move the posts a bit sorry. I was thinking about early 90s when I wrote the statement which is a definitely not 15 years ago and more like 25 years ago.

Housing has gone up but also so has education/debt. I mean my total college costs were < than what many are paying for a semester these days. Its crazy.

 

[Amused]

I did move the posts a bit sorry. I was thinking about early 90s when I wrote the statement which is a definitely not 15 years ago and more like 25 years ago.

Housing has gone up but also so has education/debt. I mean my total college costs were < than what many are paying for a semester these days. Its crazy.

There is no fault in thinking the 90s was 15 years ago. None at all.

 

[K1052]

I knew cutting my avocado toast habit would do some good.

 

[K1052]

There is no fault in thinking the 90s was 15 years ago. None at all.

This happens to me with alarming frequency now.

 

[evident]

You just moved the goal posts. You said 15 years ago, not 33 years ago.

---

Anyway, gas prices are pretty flat or lower, if adjusted for inflation:
View attachment 86754

I don't know where you're buying coffee at $5 a cup. Starbucks and other coffee shops are usually around $3 for a cup of coffee. More if you want fancier things.

The only thing really driving up costs for most people is housing, and that's because we've dramatically underbuilt housing in the places people want to live for the last 30 years. Color me shocked that increasing population without increasing housing has lead to a supply pinch that has driven prices through the roof. We only allow people to build luxury single family homes and literally ban building anything denser, and then act all shocked that housing prices have gone up.

Regardless, if you're making $200k/year, you are doing perfectly fine, even in some of the most expensive metros. I can personally attest to this. I'm not at that amount yet in my career, but close enough for the sake of argument: my wife (in school) and I (full time job) comfortably rent in an expensive metro area, max out my 401k and other retirement vehicles, and have plenty left over for necessities, future savings for whatever, and luxury purchases.

I noticed that starbucks has very variable pricing. One starbucks near me sells a grande coffee for 3.85 and another by my work sells the same shit for 5.80. ill still take it over dunkin any day thjough

 

[woolfe9998]

I thought you were going to say that millennials collectively and unanimously decided to never vote for republicans. Now THAT would have been good news.

Anything else besides what happens next year is marginally relevant at best to the fate of this country.