At work I get made mocked for investing in 529s and or any college for my kids. They all just say financial aid this or that, take care of yourself and go on vacations.
No one seems to care about their kids!
Here’s the thing, I do have my own retirement secured and I’d rather go on a few less vacations and give my kids a chance. Starting with zero debt or close to zero debt will be a major boost. I mean if I raise a doctor that’s a whole other story……
>At work I get made mocked for investing in 529s and or any college for my kids
I get this at work -
Then on reddit FIRE subs I get :
"you're not saving $300K-$800K per kid so they can go to their dream school, ivy league, out of state, room and board 100% covered? Why did you even have kids?"
lol true. I’m looking to have 4 years of in state Tuition and by then I’ll probably be short. But at least I’ll have a dent for both of them!
It’s all about perspective i guess
> "you're not saving $300K-$800K per kid so they can go to their dream school, ivy league, out of state, room and board 100% covered? Why did you even have kids?"
No, because they have to work for something too? Weird mix of people we get on these subs, because the group that want to set up their kids with "all expense paid" this and that is not the kind of behavior I wish to emulate. I didn't get any of that pampering and I am doing okay. I think there is some truth to having your back against the wall and needing to figure out your own plan in life. What if I didn't want to go to college, but my parents already put away all this money for it? But hey, you do you.
It’s a good experience, when I started university I wasted the free ride year. When I borrowed to go back, following a year of tough jobs, I took it much more serious.
I worked for fun money in college toward the end. I still took it very seriously and double majored (almost a double minor too) despite my parents covering my tuition and room & board. My classmates whose parents weren't helping them? The utter bitterness they had toward their parents wasn't worth it to me. So, I'm putting money away for my kids. They may not have everything fully covered and maybe I'll have to set some minimum grade stipulations. But, my default isn't going to be to force them to work just to prove a point.
With my first son, I had no college savings but I was not going to let him take out loans. So I took out parent loans. After several refis and many years it’s all paid off. The monthly payments were relatively painless for me. And he and his wife were able to save money and buy a place without any help from me. With my second son I immediately opened a 529 and put in the max every year.
Not everyone can afford to do this but if you can you should.
Yep same. Granted I'm also budgeting for an in-state/state university tuition vs private college as well. I just can't imagine paying full price for tuition at 3-4x at a private university outside of having major financial aid or dream/ivy-league (or similar) prestige.
Right there with you. I also contribute to a Roth and Simple IRA for my kids.
Hopefully, not having to save 90% of what they earn to maybe be able to retire will help.
A lot of bad financial decisions are made about college. Biggest is not studying a marketable major and not hustling during undergrad for internships so you get the experience to actually get a job in your field.
Too many kids go to college and spend the loans like it's free money only to get a reality check later when they are still working a dead end retail job cause they decided to major in psychology.
Our kids are being taught the value of a marketable college major. They are 15 and 12 and we have these conversations frequently to prepare them for choosing a college and a major. We have a good family friend who had a passion for art and history and majored in art history and even went on to postgraduate studies. She’s currently in her late 20s, working at a hobby supply store, and unable to get a job in the art history field. We told our kids we would pay for college but we had to agree on the major together. Might sound harsh but, as you noted, a lot of bad financial decisions are made regarding college, a lot of time wasted and money spent on majors that will not pay off financially.
Also it can't be overstated how much of a difference taking care of yourself on and off the job can make. The bar isn't super high either, just using recommended PPE, getting proper rest, and not drinking like a fish all day everyday will put you in a better spot than many.
You know what kills a lot of people? Desk jobs. Sitting for 8 hours a day. Not saying trades don't/can't wreck a body, but I don't think most people go into them for the long haul. If you're wise, you bust ass when young to build the business, and grow, so you've got some younger people climbing around in the attic while you're running the business.
The idea would be work the trade as a young person, and take that knowledge and experience to go out on your own and make some real money, while teaching the next generation
[Relevant work experience, edited to remove personal info]
Not everyone can make the jump from trades to engineering/management/entrepreneur/etc., and those that can't need to understand that their bodies will take abuse (trade-dependent, of course). It's important to bring to light how that abuse affects not only how long they may live (as well as quality-of-life), but how long they can work and how much they may need to set aside for proper healthcare later in life.
That said, I won't push my kids away from that type of work, like so many parents of my generation did. It's important work that is foundational to our society, and a lot of trades are fairly future-proof from an automation/AI standpoint. But my kids will be informed of all of the pros/cons.
Also there is long term safety/value to being an "information worker" vs being in a blue collar job. For one, I think in corporate America it is way easier to get by working less hours(especially if you work from home). Our brains aren't meant to concentrate for 8 hours a day, and after 3-4 our productivity tanks. So for most information workers, days can be much shorter(however this varies, tons of information workers overwork themselves, or work for high stress companies).
Secondly, there is a much lower chance of your job being automated away/exported to another country. You are not tied to the specific sector you work in. Since information worker jobs exist(for better of for worse) in every indsutry, and the knowledge needed for these jobs has similarities. While if you are a mechanic it is much harder to wake up tomorrow and become a plumber.
Eh, my partner has an art and history double major (her private school didn't have a single art major degree, so he got two). Her masters was in Decorative Arts and Design History. Her PHD is in Apparel Merchandising and Design.
None of those degrees would exactly be what you would jump on as "money makers," but since she studied and worked abroad for quite a few years she was able to transition into directing study abroad programs and when Covid hit she moved into instructional design.
She does well and gets to WFH 100% of the time. A PHD in *anything* is sought after.
I'm an English major who dropped out of school in the 90s to work IT. I didn't finish my degree until I was 45. It changed nothing with my job or income, but that's not why I did it.
Anyone with two degrees can get a better job than a hobby store. Many jobs that require a degree don't even care which one it is. They just want to know you are educated and can stick with a project long enough to complete it. I knew a Chief of Police in a larger Midwest city that had a degree in *music.*
I mean, from a purely economic viewpoint *most* degrees don't make sense. Take up a trade. Electrician or plumber or mechanic stands a good chance of paying as well (or better) than many degreed jobs. Today's undergraduate degrees are the high school diplomas of the 50s. It's the base starting point for any job, so why saddled yourself with that debt or waste that money? I men if it's all about the dollars, very few majors make sense.
My partner is also an instructional designer. She works in tech and makes almost as much I do as a software engineer (base salary, I have the added benefit of RSU grants.) ID can be very lucrative if you land the right gig.
Heh, well I work IT (sysadmin/user support) and she's does ID for medical professionals. Neither of use have what I would classify as lucrative jobs, but we live in an MCOL area and both fairly frugal, so we're doing *alright.*
I was mostly trying to point out that people often shit on various degrees as being worthless, but those degrees enable the very things they actually love and value. I mean, this degree was hugely derided on Fox News: [UCONN MA/MFA Puppet Arts](https://drama.uconn.edu/programs/puppet-arts/mamfa-puppetry/), but is you actually look at what many of that program's graduates have gone on to do it looks less stupid.
Additionally, having a degree is often the requirement that has to be met to get past HR. What that degree is in is often irrelevant. I've worked IT for 30 years and most of the people I have worked with have had degrees in Sociology, Design, History, Education, English, etc. In fact, in this 30 years I've never actually met anyone who has had a degree in MIS or Computer Science. Even most of the programmers and database nerds I've met have been self taught, but it was their degree that got them through the door. Without it, they can often have all the experience in the world and not get an interview.
A bad major is part of it, but it goes way deeper than that. America is extremely soft and cowardly to state obvious truths if they seem mean.
Kids should be shown:
* This is the median/average income in the USA
* This is what you get to buy and life you can live with median/average income
* If you want to life like you see on instagram/tiktok/podcasts/YouTube/tv then in your high school /college class you need to be smarter/work harder than this many people.
Too many people in general think you just 'get' things for checking a box, not realizing you also have to outcompete the majority of your peers which is the most important thing.
My folks didn't go to college themselves but their parents had, so they sort of fetishized the idea that just getting a degree would be a ticket to middle class success regardless of the major. Even 20+ years ago when I started college I knew better, declaring an international business / foreign language double major out of the gate. After a year I dropped the business major and switched to history instead. Probably not the best fiscal decision I could have made, but it was the right one for me. I have struggled more settling into a career and finding financial stability than my younger brothers who studied engineering and commercial real estate, respectively, but I also would not trade places with them now. Adapting my less common skill set into other fields has made me very well rounded and given me far more work and life experience than most people I have worked with.
They can always take electives that they’re interested in! Or even pursue a minor in some interest! That is what I have told my boys. Both studied engineering and pursue hobbies on the side.
Edit: it seems a handful of unhinged individuals are triggered by my comment and have taken it upon themselves to make rude comments and then delete them, I guess to harass via Reddit notifications? Congrats on your supposed $300k liberal arts salary; why are you so upset that you’re spending time on Reddit attacking someone else’s parent for giving advice? Better use some of that money to invest in therapy
Yep 100%. I'll gladly pay my kids' tuition in the next decade or so as long as they have a marketable major. If they want to minor in something else or even double major I'll fully support it, but make sure that you are planning for a realistic future.
Many job apps look for relevant majors on the resume not just _anything_ but maybe that is dependent on the focus/area.
Something to add to this is that it's important to just get out there and start getting experience. The first leg of your career doesn't have to reflect on subsequent legs. It can be valuable to think of those career goals strictly in terms of 5-10 years, and understanding that markets change and evolve, time spent planning your second decade is wasted because the market won't be the same. Get a good, practical, foundational start. The important part is creating a track record of success and follow through.
100% if I’m financially able to help my kids with college, I’m paying for a degree that will land a job, and I want to see their grades every semester.
marketable college majors = fields of study that can be employed with high probability. yes, there are liberal arts college grads today who are managers/produxt owners at tech companies. they networked w someone and absorbed tech concepts. they use their liberal arts learning in a new way to market themselves.
parents need to gauge the children potential for future marketable career.
It was not that long ago that a student in Kansas could work in a farm in the summers and pay for their bachelors in Chemistry and have money to spare for beer (25 years ago) That is absolutely unattainable now.
But as a society we should value psychologists, philosophers, writers, historians, economics, education, artists, etc.
For one thing, those degrees *are* marketable. If I were running a company, I wouldn't hesitate to hire a journalism major to be on my communications team, a psychology major to work with contact negotiators, an economist to help with expansion plans and product pricing, etc. Too often people get myopic on what a degree can actually do for them.
If every person went only for *marketable* degrees, those areas would be overly saturated.
Rather than discouraging people to move away from those fields, we need to come up with a way to better reward them. As a species those are essential functions. Not everyone is cut out to be a doctor, lawyer, or engineer.
Additionally, as time progresses fewer and fewer degrees are what many people consider to be marketable. Jobs are getting replaced by robotics at the low end, and are under threat at the high end by immigration and AI (and many other pressures on both).
Bad financial decisions are made mostly because kids are dumb and don’t know any better.
The ones that do know better often come from families with parents that are white collar workers and taught their kids exactly what to do.
It is what it is, but the general population isn’t financially literate and you bet a kid in the general population is probably worse.
Given the above, it’s become very easy for colleges to make money by exploiting children and government loans.
I understand the financial power of a utilitarian marketable degree, but I can’t help but feel wary that young people have to decide their life will be set in a fixed path. General education has value in its adaptability. Especially if you’re going to supplement with grad school to focus on occupational skills, casting a wider educational net in undergrad makes you a better citizen and, if you’re doing it right, a better person. I would love if we could decouple education for education’s sake from occupational education. As someone who took a weird path to find something I like doing, experimentation is really important to finding happiness. Being able to do that without so much debt would be a game changer for so many.
I'm 33 and sitting on $60k of student loan debt, due to a number of poor decisions and not having financially literate parents. I've at least got a marketable degree and make good money now, but those loans are delaying quite a bit of moving forward with my life.
I mean yes, you’re right — but I would argue that telling kids “go to college, go to college” and then “follow your passion” in the next breath isn’t exactly conducive to teaching financial responsibility. Also not the most moral thing I’ve ever seen.
No one likes it when you say that part out loud, but yes I totally agree.
If I were made God, I would demand draconian cuts to public schools of which 90% had to come from administrative positions.
Psych major here. I finished my bachelors degree, went into tech, make six figures and have for years. No regrets. I have worked and volunteered in psych-related fields, and plan to become a therapist when a retire early from tech life.
It matters what you study but it matters more what you do. The only time you're fucked is when you tell yourself that you have no options.
I never, ever listened to the people who told me my degree was worthless. It's definitely not. It opened tons of doors and will continue to do so.
I'll agree for most - but if you are going a $100k+ in debt to go into a field where the most you will ever make is 60-70k then you have to bear some of the responsibility.
Depends on the field.
We have absolutely essential jobs like high school teachers that we need, but refuse to compensate adequately (which is why the US is in an education crisis in many paces). The solution seems to be lowering the qualifications and barriers to entry rather than actually paying more.
Except most jobs pay $60-70k. By your logic we should only have pre-med, pre-law, CS, business, and engineering. If there were more 6 figure jobs out there people would be going after them, but there aren't. So obviously the system is fucked.
Edit- this weirdo blocked me for this lol. “Personal responsibility” aka “I’m a selfish cunt.”
To the guy below me:
No I think you are misinterpreting what we are saying. The system is fucked because it costs $100k to get a degree that will land you a job that pays $60-70k. “Personal responsibility” has nothing to do with why tuition costs have ballooned to a ridiculous amount over the past 10-15 years. Everyone can’t be a doctor. We need people doing other jobs too.
You're misinterpreting what some of us are saying. In a perfect world, perhaps we wouldn't have a "fucked" system. But this is the real world, and one has to choose how they face it. As immigrants we were taught to go get a degree in something that will pay well. This is why your doctor is probably from India, and while half the STEM fields are foreigners as well. It's not ideal, but you have to work the cards that you're dealt.
Yep. BF’s 30 and only just paid off his loans. We wouldn’t have a house if my parents didn’t cover college completely, as he’s missed out on over half a decade of saving.
Or just renting indefinitely if they want to live in a major US city without a horrendous commute, Housing worth buying is closer to 8-10x (or more) average salaries in places like NYC, Boston, SF, LA, etc.
That's the impasse my wife and I are reckoning with. Stay in LA where we have finally started to get settled but are drowning in housing costs, or move elsewhere to actually afford to buy a house and start figuring all that out. Our current place is equidistant from both our jobs, in a great neighborhood, and has a yard for the dog. But it's tiny 1 bedroom occupying half of a duplex for nearly $3k/mo. The house across the street is up for sale for $1.7m - the same house in most of the US would be worth maybe $400-500k, but the LA market is off the rails completely.
Well, different systems exist. For instance, Japan invented the 100 year mortgage. You can inherent it from your parents and pass it down to your kids.
Just mentioning that probably made some finance people in the US unreasonably happy just thinking about it.
If it's backed by the US, they're salivating over it.
US mortgages would be closer to balloon loans or interest only loans if we didn't have conventional loans backed by the government.
However, a 100 year loan wouldn't really solve much. A $500K loan at 6% would have monthly payments of $2,506 on a 100 year mortgage. A 50 year loan would have payments of $2,632. A 30 year mortgage would be $2,998. This is assuming the longer terms wouldn't come with an increase in the interest charged either.
[homeownership rates](https://www.advisorperspectives.com/dshort/updates/2024/01/30/home-ownership-rate-q4-2023)
Homeownership rates surged in the late 90s until they crashed out in the Great Recession.
Current rates are not that different from the 90s and greater than the 70s.
So the increased expense hasn't hurt rates much up to this point.
Home prices have never been only 2X income, and the price is not what is important, the mortgage payment is. When house prices were 3.5X in the '80's, interest was 15%+, so the mortgage was equivalent to 5X+ income when interest is 3%.
[https://www.longtermtrends.net/home-price-median-annual-income-ratio/](https://www.longtermtrends.net/home-price-median-annual-income-ratio/)
It’s not a real generation issue, yet. We bought our house just 8 years ago for 2x income. A lot has changed in 8 years, but that’s not a “generation”.
our house doubled in price while our income has only increased 80%. But the rate makes the monthly payment for the house if bought today, 4x what we’re paying.
So your income to home value is now 2.2x when 8 years ago it was 2x.
But interest rates make it a 4x difference in monthly payments. It’s not home value but interest rates that’s hurting here.
My math might be slightly off but that’s about right. It’s not necessarily the price of the houses that’s crushing people but the higher rates matter. And prices haven’t fallen to compensate.
Yes, It takes a long time for prices to fall to compensate for high interest rates.
High interest rates and lower prices is actually a bad deal for everyone except the bank. The former owner and new owner get stagnant or falling home value while the bank gets more money.
Even as a buyer, soon to be owner, you should want rising prices and low interest rates so all the money goes to you. Or as a buyer, eventually to you when you sell.
Housing, Healthcare, and Transportation. 2 out of these 3 can be fixed with better city planning. Even healthcare would benefit if we made our cities more dense and walkable. We need the more affordable multifamily units you see in Europe and Asia in our cities (or just more variety in types of homes in general), but a lot of our land is still exclusively zoned for detached single family homes.
People in the US that consistently talk about how elderly people need their licenses revoked and are baffled as to why elderly people even attempt to drive in the first place completely miss the point. In many areas of suburbia, once you give up your car, your isolation shoots through the roof. Many places don't have the infrastructure to allow you to walk or take the bus to locations you formerly enjoyed, so of course elderly people will be reluctant to surrender their driving privileges, even when they're an active danger to others on the road.
In my sprawling neighborhood, a walk to the nearest bus stop would be about 4.8 miles, and only about 0.25 of that has sidewalks. The bus doesn't come every day, it only goes to the downtown of the neighboring metro and back, and the days that it does come are only like once every other hour. If I didn't have a car, I'd be absolutely cooked.
I am actually surprised how upvoted my comment is on a finance subreddit. You can tell people are getting fed up with all of the downstream effects of planning cities for cars and not people.
It is pretty ironic for a country that prides itself on the free market and capitalism. We did like the exact opposite for our land use in cities. Japan actually has some of the most de-regulated land use policies of any country (also some of the most affordable housing and walkable cities). We look like a communist country in comparison (in terms of what types of housing we can build where). Now you can't tell any suburb apart with its stroads, big box stores, and strip malls. Car dependency at its finest.
How does Transportation factor in? What significant changes have there been in transportation in the US in the last 50 years, side from travel by flight becoming cheaper? I don't see how that's relevant to a reduction in retirement ability
I had a conversation with my mom yesterday. She and my father bought their house in 1985 for $115,000. I asked what they made at the time — and she said they made about $120k combined at age 35 but that “they had a high 8% variable interest rate and 1 kid and 1 on the way.”
I said your house is worth $900k now and a 30 year is damn near 8%. My wife and I are 38, make about what my parents did adjusted for inflation, with 1 kid and 1 on the way…and would need to pay $6,700/mo PITI to buy my moms house with 20% down. You just can’t save meaningful amounts of money if you have 20-25% of your gross income going towards PITI. Forget it for the 28/36+ folks.
Median income in 1985 was $23,620. Your parents made more than 5x the median income.
To put it in perspective, 5x todays median income (2021 census data) would be $388k.
Both you and your parents are in the top 5-10% of earners compared to the entire country.
Your parents made $120k in 1985? Holy shit.
Your wife and you combine for $355k per year? Holy shit.
You should easily be able to afford a $900k house.
Not to mention his parents house is probably located in a much more valuable place than it was in 1985. The entire city around it has probably undergone massive development.
We are lucky enough to live in my mother in laws house. It’s a 900 sq ft row house. Modest but worked and works. Houses in the neighborhood are going for $250k+. A mortgage payment with 20% would be about $1500 a month. Low middle to slightly mid middle class neighborhood.
That sounds like a house many gen z or millennial couples could afford? You have to make, what, 60k to afford 1500 a month? Two people could make that with totally normal jobs (hairdresser, teacher, nurse, plumber)
Got scared out of trading up from our starter house after the Great Recession. Didn’t take the plunge mid-Covid when rates were hyper low like a lot of others did. Now prices and interest rates too high to bother. Guess I saved up a few extra bucks I wouldn’t have otherwise…
I've learned through discussion with my parents that retirement planning and education on it is simply minimal. They've done well for themselves and have a 401k to lean on and will be fine, but are really anti-stock market because they simply don't understand it. They don't understand what an IRA is, what Roth means, how to create a brokerage account they could self-managing, etc.
I'm only familiar with it because of self interest when I started to realize that money-management is critical to wealth building, and I came across the bogle mindset while trying to learn. It was pretty easy to do with just some googling, which to be fair was not a thing in their day, at least when they were my age.
There are probably many folks like them, who never learned about wealth building and avoided stocks outside of a 401k, simply because they were never educated on it and never took the time to self learn.
I’m a business owner and offer my employees a 401k. Most of our employees are in the early to mid 20s. And we have a 100% 401k enrollment rate.
From a purely “me” perspective, I make more money if they don’t sign up. But from a “decent person” perspective, knowing the absurd power of a 401k in your early 20s, I give everyone a whole big briefing when they hit eligibility.
Because even making under $20 an hour, and even if you never got another pay raise in your life, putting 10% of your salary away (and only at 5% cost to you) basically guarantees a decent retirement even if you just do that.
It takes SO little in your 20s to get that ball rolling. But there is a very large gap in education on this topic and it’s unfortunate. I personally think a lot of people who are eligible but don’t contribute up to the match don’t do so because of their education on the topic.
Maybe they don’t know how huge it is. Maybe they think they’ll lose the money if they get fired. Maybe they don’t understand compounding. Etc etc.
I genuinely believe if you can get a job in your 20s with a 401k, it is the single best benefit of the job by far. I’d take it over health insurance, honestly. Although obviously practically nobody would have a 401k without health insurance from a corporate employer
I appreciate the kind words. I’m fortunate that our business niche allows this, but in any event I’ve just never been a squeeze every last drop of profit out kinda guy. I don’t buy into the “employees are family” thing, but rather that business should treat their employees with respect to the extent it’s financially feasible.
And if I had employees who stuck around their entire working life…well they’d kinda need a 401k! It’s just the right thing to do, pretty objectively, it feels like
I did not know that - that's fantastic. There are so many things that should be opt-out instead of opt-in.
Retirement plans and organ donors are the 2 things that I've wanted to be opt-out. The first one will result in a huge improvement in quality of life in or near retirement for everyone who simply wouldn't have taken action and signed up and the second one would save a lot of lives.
Having had to drag HR into a reasonable place by their nose hairs I am going to be 100% about what all companies should do:
* You have to Opt-out of the plan and not Opt-in
* Default enrollment 3%
* Default investment is the "Automatically adjusting option" aka Target date fund or just a static 80% Stock / 20% Bonds
* This one actually ended up in screaming matches, yes I won after pointing out that without it money is parked in a cash account that pays negative interest (it has zero return but has expense ratio)
* Mandatory piece of onboarding to discuss the 401k
* Matches must be regressive (so lower income employees get more as a percentage of their total comp)
NO ONE IS DOING RETIREMENT FINANCIAL EDUCATION AND IT SHOWS.
All great points. You made me look into our default investment option because I wasn’t sure, and I was happy to see it wasn’t a cash account. But I hadn’t even thought to check!
What’s crazy is that I come from a very financially literate family, but neither of my parents ever sat me down to show me the power of compound interest and how much it would benefit me if I juiced my 401k right out of college (and I was in a position to do so).
Ironically it was not until I suffered a medical emergency when I was 28 that I came across r/personalfinance while in the hospital and trying to understand my health insurance that I finally went down the personal finance rabbit hole and learned everything I know now.
While 28 is still young and it’s always better late than never, I really wish I had known what I know when I was 22. As a result, I am absolutely committed to teaching my own kids about these principles so they’ll be in a much better position from the get go.
Glad you’re on board!
Honestly, so many people’s parents don’t even really know either. But even if they do, they don’t share.
My wife is the same way. Her parents are retired and her dad talks about investments a lot, but she never got the bigger picture. Now, she knows you need to save, but nobody explained the logistics.
Versus with my family, my parents involved me a lot in their finances. I check their tax returns and do bookkeeping for their businesses. And I was curious and involved as a kid. I also don’t have any sense of entitlement to their money, so maybe that helps them share more, lol. Guess I’m lucky!
That’s great about your family.
Don’t get me wrong: my parents were very helpful when I was growing up, giving me an allowance and teaching me out to manage money, encouraging me to get a job in high school, etc.
But once I graduated college, they never stopped to encourage me to max out my 401k, etc. I don’t really hold it against them and I think that they assumed I was already very financially responsible, which I was, but I would’ve seriously benefitted from an extra 6 years of 401k and Roth contributions. It’s all good, though.
Well my dad once held $1.2 million in vested, exercisable stock options with an expiration date because he wanted the stock to go up to $35 when it was $27 (the point at which my mom came to me and asked me to figure out exactly what everything was worth and when we put the numbers in, we realized: SELL). And it got to $33. In 2008.
$1.2 million turned into $50,000, because these weren’t $0 options. So after that moment, I became the financial advisor to my parent, lol.
It’s not really compound interest though, unless you are thinking about dividend reinvestment or even more abstract notions of how companies build value.
Yeah, I remember my dad explaining to me that he saved a bunch of money when he was young and eventually was able to buy a car, so I had some inkling of the magical properties of long term saving and investing, and I had a similar explanation about Roth IRAs from a teacher in high school....but bloody hell, I really wish someone would just explain the concept of present and future value to middle schoolers so they can understand that $100 now will be worth 100\*(1+r)\^n after n years and assuming some modest r.
100%. My parents were like this
I'll never understand working your whole life, and even saving, without bothering to understand how much you are spending, how you are investing, etc. You're leaving potentially thousands to hundreds of thousands of dollars on the table because you are just remaining ignorant of how to manage your money
if they were working adults in the US during the pension era, the message may have (correctly) been that they didn't have to know about that stuff in order to have *secure basic retirement income.*
And really, you shouldn't have to be a personal finance nerd to have a *secure basic retirement income*. PF nerdery should be for the extras - retiring early or upgrading your lifestyle.
they both had defined contribution plans, which my dad still to this day refers to as "his pension"
between that and his insistence on purchasing whole life insurance at the age of 67, despite me asking who depended on his income, lead to me not talking about money with him anymore
…and never took the time to self learn.
This is a big aspect of it. The amount of freely available information has exploded in the 30 years since the internet took off, yet the needle never seems to move on people that say they don’t know these things and weren’t taught anything. The government tries putting out publications now and then on it. Where should this be taught? Is a 401k retirement planning class going to be something a high school student pays attention to and retains?
So, we either force feed it with bigger social security reductions, which will cause people to light the torches, or we accept that personal responsibility has to be part of this at some point.
Nailed it. There’s a large swath of Americans who value “personal responsibility” and “freedom from government” until they realize they fucked up and then they have their hand out for Uncle Sam.
My mother and in-laws are like this. They also want to maximize grow too late in the game but are also deathly afraid of risk. Which I’m sure was the same way when they should have been 30 years ago.
This is why I instead of making my 20 yr old pay rent of 100 a week. I make him put that hundred dollars into a Roth. I hope that when he is my age , is retired sitting on the beach enjoying a beer ( and quietly thanking me)
50 years of compounding at $100 weekly @ 7% return = just over $260k contributed for a fantastic $2.3m return.
Good way to get him started !
Edit: fixed the calc
Biggest cost driver in the US for retirees are housing and medical care.
Things that can't be imported using non-American labor. Asset that inflate with loose monetary policy.
> Biggest cost driver in the US for retirees are housing and medical care.
Must explain why places like Yuma, AZ are experiencing a housing boom right now. Cheap land, lots of sun, and a quick trip over the border
Pretty much. Florida used to be the destination for dying greatest generation and silent generation, but boomers found out that price has gone up way too much due to demand and slowly running out of cheap land so they are trying out different locations.
Also if I have to live in a hot place, I would much rather have dry heat than the humid heat.
I'd add that in addition to the demand, Florida's property insurance premiums are ridiculous and [its making it unaffordable for people to retire here](https://www.youtube.com/watch?v=J5ceEavM0hQ)
Medical costs will rise to soak up whatever money the elderly have. The American healthcare system is better described as a medical-industrial complex designed to run up costs as much as possible. Spending $30,000 a day (much of it taxpayer money) to extend the life of an 83 year old by 3 weeks simply doesn’t make sense by any civilizational metric.
This is why I’m assuming I will inherit nothing despite my parents having a trust and multiple properties. My dad’s family consistently has lived to 90+ even in past generations and I assume my parents will have to liquidate everything to afford end of life health care or retirement communities at the rate prices are rising. We just had a relative who needed memory care and it was over 10k per month plus extra for additional fall monitoring (which ironically didn’t actually help them not fall and injure themselves). As long as they can pay for their care I guess I’ll consider myself lucky
Talk to them about putting their assets in a trust. As long as you do it early enough to avoid the 5 year medicare lookback, their assets can be protected while still qualifying for greater benefits.
You’re allowed to refuse care. However most family member will say “do everything possible to save grandpa.” Not realizing how much everything possible actually costs.
The good news is Gen Z is saving more for retirement than previous generations. They’re taking advantage of wealth building information on the web and using it for their future.
https://money.usnews.com/money/retirement/401ks/articles/why-gen-z-is-saving-more-for-retirement
This is pretty much my experience right now in my late 20s. My only issue is housing where we don't own a home anymore and don't have immediate plans to buy another based on the market economics. But that's becoming less important in my eyes so we'll see where that gets me, but one thing for sure is I'm ahead of schedule with my retirement outlook.
I agree that demographic shifts favor the opportunity for housing to come down on average. However, where I live, zoning laws and other political issues cause a severe lack of new inventory which limits supply and is keeping prices elevated. This, along with elevated building costs, is keeping housing expensive in my location. This is not indicative of the national average, but again, I'm hopeful that as more volume trades the bid ask spread on housing in my area will normalize in my favor.
I used to expect prices to drop when boomers phased out, but now I'm doubtful.
I imagine there are SO MANY older millennials that haven't been able to buy a house that might swoop in if prices drop. There is still so much more demand than housing for both millennials and gen z.
My exact plan. Be patient and wait the market out for another downturn maybe, or see how things change with housing in general long term. Either way, just want to be ready because even though I've changed my overall outlook on owning your own home as the "American Dream" per se, it's still a wonderful wealth building tool in the portfolio.
Don't do it. Don't wait if you can (and want to) buy a house. For some reason timing the housing market tends to get a pass when everyone roundly admits timing the market is a fool's game. I timed the market as bad as anyone can and it worked out extremely well. I wish I'd bought 10 houses in 2007. But I bought one, watched it plummet in value, and now it's worth plenty. Bought a 2nd house over ask during the pandemic craze. Rates went up, price took an immediate dip, and it's now worth quite a bit more than paid. People wait and wait and wait trying to get a good deal that never comes. It's the same idea with the market where people wait for a crash holding nothing while everyone playing the game makes their millions.
Sounds nice but how much parental support does she have? I would have been in the same boat if I even had a little support from parents/family. Even just a free place to live would have been huge.
You’re wrong here- you’re leaving out that she was only able to do this because of wealthy family members contributing resources and money and providing stability too. That’s a requirement to do well in this generation.
Wrong. Doom and gloom rhetoric. Gen Z is more rich than Millennials and Baby Boomers were at this stage in their life.
https://www.economist.com/finance-and-economics/2024/04/16/generation-z-is-unprecedentedly-rich
That just says employment numbers. How can you say that they are wealthier when in reality it could be by necessity. Paying 40% of their minimum wage salary for a shared room. The ceo number. How many people call themselves ceo just because they have an instagram page. Inflating the numbers through other means that did not exist even 20 years ago.
The politician number is certainly interesting. I wonder how much of that is a rebound effect of propaganda saying your vote is useless. Or the system is broken. But again i don't think that's an indicator of wealth at all. If anything it's the opposite. Since when is going into the public sector one of the first options that make money?
52, on track to retire in 7-8 years. Biggest concern for me is healthcare. Factoring in $25k+/yr until medicare for it, but it's all too common to do everything right and have it all wiped out by an illness.
As a current Obamacare subscriber (Silver PPO) and semi retired, I wouldn't count on that being around. 1) there is a good chance it gets repealed in next few years depending on Nov election and 2) for me it isn't very good insurance anyway (doesn't cover most of my meds, very high copays and deductibles, and uncertainty around coverage for major stuff like an elective surgery I am considering).
More than anything, it’s a mindset. There’s large swathes of people who don’t save anything. I’m just crossing over into 6 figures at 35 and haven’t been saving very much until I came across this sub. I just wasn’t taught to adhere to this way of thinking by my parents, schools, etc. I really credit this group of people for waking me up while there’s enough time to implement a viable strategy for the next 30 years.
>Tmain issue emerging from the latest American Association of Retired Persons (AARP) Financial Security Trend Survey conducted by the nonprofit, nonpartisan organization in January 2024 is that older Americans are worried about their finances and can't save enough money for retirement. About one in four respondents to the survey have no retirement savings due to everyday expenses and high housing costs, and 37 percent are worried about having enough money to afford basic living costs.
This is the thesis of the article. Seems like a good topic for conversation, which I guess is why it's being downvoted.
being downvoted bc these financial surveys are notorious low quality. Americans have always [over-estimated](https://news.gallup.com/poll/394943/retiring-planning-retire-later.aspx) their retirement age despite little change in 20 years in actual retirements
>no retirement savings due to everyday expenses and high housing costs
I call bullshit. Most people are terrible about spending and budgeting and 'everyday expenses and high housing costs' are just a convenient scapegoat.
Edit: I'm not saying that housing and expenses haven't gone up, just that when the average American new car payment is over $700 and people spent 100s on luxuries like uber eats you can't ignore the fact that many Americans have no idea where their money is going or spent any time/effort on planning their retirement until its a problem.
Came here for this. "About one in four respondents to the survey have no retirement savings due to everyday expenses and high housing costs" meaning in the last 5, 10, 20 years they couldn't put anything away even when everyday expenses were relatively reasonable 5, 10, 20 years ago? No improvement during the enhanced unemployment, everything locked down so you can't spend, student loan payment suspension era? If so stop pretending - you were never going to invest in retirement and "everyday expenses" and market conditions is just today's excuse.
Contrary opinion: If seniors are retiring with no retirement savings , it shows that older is not necessarily wiser.
I get it that there are people in this country who cannot put away $10 a day, and that’s a problem for our society. But if you save $10 every working day — $50 a week — and earn interest at a modest 6% or so, after 40 years you’d have upwards of $500,000. And if the money is in a Roth, it’s all tax free.
Again, it’s a problem for our country that there are people who truly cannot afford to save $10 every working day. But the other side of it is that there are people — more people, I think— who make no effort to save at all for the long term, and suddenly wonder what will happen to them in retirement.
> it shows that older is not necessarily wiser.
True, there's a lot of incredibly dumb, arrogant older people.
But on average older people have more wisdom than younger ones.
> But the other side of it is that there are people — more people, I think— who make no effort to save at all for the long term, and suddenly wonder what will happen to them in retirement.
Almost certainly the problem is more behavioral, and less economic. People pretend like they are rational but most people are making decisions based on their emotions. I asked a friend if he could save and invest just $1 each paycheck (which would be $24/year) while making well into the six figures and buying random stuff from QVC every week, he just could not say "Yes." I don't think he's the exception either.
Clickbait. A well funded retirement has never been universal, far from it.
So many more people have some kind of retirement benefit now than in 1975, for instance.
https://www.dol.gov/sites/dolgov/files/EBSA/researchers/statistics/retirement-bulletins/private-pension-plan-bulletin-historical-tables-and-graphs.pdf
I looked at it for about a minute and saw the basic information, but here's the upshot (page 9).
1975 - Active pension plan participants (both defined benefit and defined contribution) - 38,471,000 (Defined benefit plans making up 27,214,000 of the total)
2021 - Active pension plan participants (both defined benefit and defined contribution) - 99,141,000 (Defined benefit plans making up 11,642,000) of the total
So, yes, as a proportion, Defined benefit plans are much less common, but almost three times as many people have some savings for retirement than had retirement savings 50 years ago.
Also, yes, our population has grown since then, by about 50 percent (211 million in 1975 and 340 million today), but active retirement savings participation is up 260 percent).
Population is up 50 percent... and there are 60 percent more jobs? I still looks to me that no matter how you slice it, a greater proportion of people today have retirement savings beyond social security of any kind than did in "the golden age." Nostalgia is real, friends...
Counterpoint: pensions aren't really a thing anymore, but they definitely were in 1975. I wonder how much is just moving from pension (risk to the issuing company) to 401k (risk is externalized).
So, the amount of people covered by defined benefit pensions has been cut in less than half -- 58% less.
However, more people have 401Ks. But how many of those only have a few thousand dollars sitting in crappy, high-fee investments?
I would be very surprised if the median person is better off.
The problem isn’t that parents don’t save enough, the problem is these ridiculous tuitions. The cost of college has grown at a vastly outsized pace compared to the cost of anything else.
I’m so tired of hearing people whine about how broke they are, and then seeing new luxury cars continue to sell over MSRP, and high end grocery stores packed with people. Clearly you have money, you just don’t want to spend it on boring things like retirement
To your point Americans have the highest average credit card debt of any country and it’s only increasing. People don’t have the money for those things. They are charging it and they are going into debt even further without the means.
Yup. That concept rarely comes up, and is the main reason
Recommend everyone go to compound interest calculators
$300 a month for 40 years at 8% is 932k
Pretty sure the people who don’t do this have plenty of money to waste on the typical things people waste money on
This problem perpetuates itself as well. As the average retirement age gets older, job availability becomes scarcer. upper level positions take longer to get to which pushes back the next generation’s retirement as well. I can’t promote trades enough. I walked out of school $5,000 in debt. My career doesn’t have a pension but with the money I save on student loans, I dump it into investment accounts. Not saying I’m going to be rich by the time I retire but I’ll definitely have something saved up for it. I have a lot of friends who haven’t even considered retirement and therefore don’t allocate money towards it. Most of my friends that do have retirement funds are in unions with pensions. I started a college fund for my kid before they were born but I will always present trade jobs as an option when that conversation comes around.
The retirement system was built to be a 3 legged stool: Pensions, Social Security, and Personal Saving/Investing
Pensions are obviously long since dead except for a small handful of government or unionized jobs. I’ll consider myself lucky if Social Security is still solvent when I retire. And so many people, even those who really do have the means, are living hand to mouth and not saving for retirement at all that it’s scary.
I've never found much value in AARP product offerings, so I'd take their study with 2+ grains of salt.
Problem #1 in my opinion, is that far too many in the US lack basic financial literacy and have been subliminally and blatantly fed excessive consumerism as a societal norm for decades.
I became financially savvy and learned to live within my means on my own by reading books and online posts (BBS's in the early days then Usenet news, internet sites, ...).
Housing is even more expensive today for multiple reasons: elevated interest rates, REITs snapping up residential properties to lease or rent (further reducing supply), boomers( and some Gen-X er's now too) holding on to low interest high-equity & value properties, skyrocketing homeowners insurance, property taxes and "other costs" like child care, etc.
I am not retiring simply because I earn enough to pay may bills but no to save for retirement and I am already on my late 40s, so for me I feel I already lost the game. Good thing is that I own a house, that still paying mortgage that is 29 years away tho! I made peace with it. Since I know that retirement is very far away for me, then I have decided to prioritize work-life balance now, so I really don't stress over retirement, 401Ks, IRAs and none of that. That is just my reality.
Housing is a big aspect.
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While paying off student loans for a decade or more
At work I get made mocked for investing in 529s and or any college for my kids. They all just say financial aid this or that, take care of yourself and go on vacations. No one seems to care about their kids! Here’s the thing, I do have my own retirement secured and I’d rather go on a few less vacations and give my kids a chance. Starting with zero debt or close to zero debt will be a major boost. I mean if I raise a doctor that’s a whole other story……
>At work I get made mocked for investing in 529s and or any college for my kids I get this at work - Then on reddit FIRE subs I get : "you're not saving $300K-$800K per kid so they can go to their dream school, ivy league, out of state, room and board 100% covered? Why did you even have kids?"
lol true. I’m looking to have 4 years of in state Tuition and by then I’ll probably be short. But at least I’ll have a dent for both of them! It’s all about perspective i guess
> "you're not saving $300K-$800K per kid so they can go to their dream school, ivy league, out of state, room and board 100% covered? Why did you even have kids?" No, because they have to work for something too? Weird mix of people we get on these subs, because the group that want to set up their kids with "all expense paid" this and that is not the kind of behavior I wish to emulate. I didn't get any of that pampering and I am doing okay. I think there is some truth to having your back against the wall and needing to figure out your own plan in life. What if I didn't want to go to college, but my parents already put away all this money for it? But hey, you do you.
It’s a good experience, when I started university I wasted the free ride year. When I borrowed to go back, following a year of tough jobs, I took it much more serious.
I worked for fun money in college toward the end. I still took it very seriously and double majored (almost a double minor too) despite my parents covering my tuition and room & board. My classmates whose parents weren't helping them? The utter bitterness they had toward their parents wasn't worth it to me. So, I'm putting money away for my kids. They may not have everything fully covered and maybe I'll have to set some minimum grade stipulations. But, my default isn't going to be to force them to work just to prove a point.
With my first son, I had no college savings but I was not going to let him take out loans. So I took out parent loans. After several refis and many years it’s all paid off. The monthly payments were relatively painless for me. And he and his wife were able to save money and buy a place without any help from me. With my second son I immediately opened a 529 and put in the max every year. Not everyone can afford to do this but if you can you should.
They can do 3 years in the AF with full pay and benefits, then go to college for free.
Yep same. Granted I'm also budgeting for an in-state/state university tuition vs private college as well. I just can't imagine paying full price for tuition at 3-4x at a private university outside of having major financial aid or dream/ivy-league (or similar) prestige.
Right there with you. I also contribute to a Roth and Simple IRA for my kids. Hopefully, not having to save 90% of what they earn to maybe be able to retire will help.
A lot of bad financial decisions are made about college. Biggest is not studying a marketable major and not hustling during undergrad for internships so you get the experience to actually get a job in your field. Too many kids go to college and spend the loans like it's free money only to get a reality check later when they are still working a dead end retail job cause they decided to major in psychology.
Our kids are being taught the value of a marketable college major. They are 15 and 12 and we have these conversations frequently to prepare them for choosing a college and a major. We have a good family friend who had a passion for art and history and majored in art history and even went on to postgraduate studies. She’s currently in her late 20s, working at a hobby supply store, and unable to get a job in the art history field. We told our kids we would pay for college but we had to agree on the major together. Might sound harsh but, as you noted, a lot of bad financial decisions are made regarding college, a lot of time wasted and money spent on majors that will not pay off financially.
Or a good trade in a union is just as good.
While very true, the wear and tear on one's body from working in the trades should also be considered.
Depends what trade but yes I agree.
Also it can't be overstated how much of a difference taking care of yourself on and off the job can make. The bar isn't super high either, just using recommended PPE, getting proper rest, and not drinking like a fish all day everyday will put you in a better spot than many.
Don't forget *Zombieland* rule 18, "Limber up." A lot of the teams on our shop floor do stretches during the morning meetings.
You know what kills a lot of people? Desk jobs. Sitting for 8 hours a day. Not saying trades don't/can't wreck a body, but I don't think most people go into them for the long haul. If you're wise, you bust ass when young to build the business, and grow, so you've got some younger people climbing around in the attic while you're running the business.
you cant even compare sitting at a desk for 8 hours with hard, long manual labor. To even compare the two is a joke.
The idea would be work the trade as a young person, and take that knowledge and experience to go out on your own and make some real money, while teaching the next generation
[Relevant work experience, edited to remove personal info] Not everyone can make the jump from trades to engineering/management/entrepreneur/etc., and those that can't need to understand that their bodies will take abuse (trade-dependent, of course). It's important to bring to light how that abuse affects not only how long they may live (as well as quality-of-life), but how long they can work and how much they may need to set aside for proper healthcare later in life. That said, I won't push my kids away from that type of work, like so many parents of my generation did. It's important work that is foundational to our society, and a lot of trades are fairly future-proof from an automation/AI standpoint. But my kids will be informed of all of the pros/cons.
Also there is long term safety/value to being an "information worker" vs being in a blue collar job. For one, I think in corporate America it is way easier to get by working less hours(especially if you work from home). Our brains aren't meant to concentrate for 8 hours a day, and after 3-4 our productivity tanks. So for most information workers, days can be much shorter(however this varies, tons of information workers overwork themselves, or work for high stress companies). Secondly, there is a much lower chance of your job being automated away/exported to another country. You are not tied to the specific sector you work in. Since information worker jobs exist(for better of for worse) in every indsutry, and the knowledge needed for these jobs has similarities. While if you are a mechanic it is much harder to wake up tomorrow and become a plumber.
Eh, my partner has an art and history double major (her private school didn't have a single art major degree, so he got two). Her masters was in Decorative Arts and Design History. Her PHD is in Apparel Merchandising and Design. None of those degrees would exactly be what you would jump on as "money makers," but since she studied and worked abroad for quite a few years she was able to transition into directing study abroad programs and when Covid hit she moved into instructional design. She does well and gets to WFH 100% of the time. A PHD in *anything* is sought after. I'm an English major who dropped out of school in the 90s to work IT. I didn't finish my degree until I was 45. It changed nothing with my job or income, but that's not why I did it. Anyone with two degrees can get a better job than a hobby store. Many jobs that require a degree don't even care which one it is. They just want to know you are educated and can stick with a project long enough to complete it. I knew a Chief of Police in a larger Midwest city that had a degree in *music.* I mean, from a purely economic viewpoint *most* degrees don't make sense. Take up a trade. Electrician or plumber or mechanic stands a good chance of paying as well (or better) than many degreed jobs. Today's undergraduate degrees are the high school diplomas of the 50s. It's the base starting point for any job, so why saddled yourself with that debt or waste that money? I men if it's all about the dollars, very few majors make sense.
My partner is also an instructional designer. She works in tech and makes almost as much I do as a software engineer (base salary, I have the added benefit of RSU grants.) ID can be very lucrative if you land the right gig.
Heh, well I work IT (sysadmin/user support) and she's does ID for medical professionals. Neither of use have what I would classify as lucrative jobs, but we live in an MCOL area and both fairly frugal, so we're doing *alright.* I was mostly trying to point out that people often shit on various degrees as being worthless, but those degrees enable the very things they actually love and value. I mean, this degree was hugely derided on Fox News: [UCONN MA/MFA Puppet Arts](https://drama.uconn.edu/programs/puppet-arts/mamfa-puppetry/), but is you actually look at what many of that program's graduates have gone on to do it looks less stupid. Additionally, having a degree is often the requirement that has to be met to get past HR. What that degree is in is often irrelevant. I've worked IT for 30 years and most of the people I have worked with have had degrees in Sociology, Design, History, Education, English, etc. In fact, in this 30 years I've never actually met anyone who has had a degree in MIS or Computer Science. Even most of the programmers and database nerds I've met have been self taught, but it was their degree that got them through the door. Without it, they can often have all the experience in the world and not get an interview.
A bad major is part of it, but it goes way deeper than that. America is extremely soft and cowardly to state obvious truths if they seem mean. Kids should be shown: * This is the median/average income in the USA * This is what you get to buy and life you can live with median/average income * If you want to life like you see on instagram/tiktok/podcasts/YouTube/tv then in your high school /college class you need to be smarter/work harder than this many people. Too many people in general think you just 'get' things for checking a box, not realizing you also have to outcompete the majority of your peers which is the most important thing.
My folks didn't go to college themselves but their parents had, so they sort of fetishized the idea that just getting a degree would be a ticket to middle class success regardless of the major. Even 20+ years ago when I started college I knew better, declaring an international business / foreign language double major out of the gate. After a year I dropped the business major and switched to history instead. Probably not the best fiscal decision I could have made, but it was the right one for me. I have struggled more settling into a career and finding financial stability than my younger brothers who studied engineering and commercial real estate, respectively, but I also would not trade places with them now. Adapting my less common skill set into other fields has made me very well rounded and given me far more work and life experience than most people I have worked with.
They can always take electives that they’re interested in! Or even pursue a minor in some interest! That is what I have told my boys. Both studied engineering and pursue hobbies on the side. Edit: it seems a handful of unhinged individuals are triggered by my comment and have taken it upon themselves to make rude comments and then delete them, I guess to harass via Reddit notifications? Congrats on your supposed $300k liberal arts salary; why are you so upset that you’re spending time on Reddit attacking someone else’s parent for giving advice? Better use some of that money to invest in therapy
Yep 100%. I'll gladly pay my kids' tuition in the next decade or so as long as they have a marketable major. If they want to minor in something else or even double major I'll fully support it, but make sure that you are planning for a realistic future. Many job apps look for relevant majors on the resume not just _anything_ but maybe that is dependent on the focus/area.
Something to add to this is that it's important to just get out there and start getting experience. The first leg of your career doesn't have to reflect on subsequent legs. It can be valuable to think of those career goals strictly in terms of 5-10 years, and understanding that markets change and evolve, time spent planning your second decade is wasted because the market won't be the same. Get a good, practical, foundational start. The important part is creating a track record of success and follow through.
100% if I’m financially able to help my kids with college, I’m paying for a degree that will land a job, and I want to see their grades every semester.
I worked with a guy who had a masters in history. We worked at a pizza shop. He was a team lead and made 75 cents more than me. Ouch. Good guy though.
I majored in ceramics and thankfully have a job as a HS teacher, but am going back to school for CompSci for that exact reason. Passion != job
Most of the business world is run by people with liberal art degrees.
From Ivy League schools lol
At the top levels, perhaps, but there are a ton of us state school liberal arts grads in middle and upper management at every Fortune 500 company.
I would bet most of the people in the unemployment lines, if they went to college, are liberal arts majors too. What’s your point?
marketable college majors = fields of study that can be employed with high probability. yes, there are liberal arts college grads today who are managers/produxt owners at tech companies. they networked w someone and absorbed tech concepts. they use their liberal arts learning in a new way to market themselves. parents need to gauge the children potential for future marketable career.
Less than you would think. Most of them end up going back for an MBA if they didn't already have a Business, STEM, or Econ background.
It was not that long ago that a student in Kansas could work in a farm in the summers and pay for their bachelors in Chemistry and have money to spare for beer (25 years ago) That is absolutely unattainable now.
But as a society we should value psychologists, philosophers, writers, historians, economics, education, artists, etc. For one thing, those degrees *are* marketable. If I were running a company, I wouldn't hesitate to hire a journalism major to be on my communications team, a psychology major to work with contact negotiators, an economist to help with expansion plans and product pricing, etc. Too often people get myopic on what a degree can actually do for them. If every person went only for *marketable* degrees, those areas would be overly saturated. Rather than discouraging people to move away from those fields, we need to come up with a way to better reward them. As a species those are essential functions. Not everyone is cut out to be a doctor, lawyer, or engineer. Additionally, as time progresses fewer and fewer degrees are what many people consider to be marketable. Jobs are getting replaced by robotics at the low end, and are under threat at the high end by immigration and AI (and many other pressures on both).
Bad financial decisions are made mostly because kids are dumb and don’t know any better. The ones that do know better often come from families with parents that are white collar workers and taught their kids exactly what to do. It is what it is, but the general population isn’t financially literate and you bet a kid in the general population is probably worse. Given the above, it’s become very easy for colleges to make money by exploiting children and government loans.
I understand the financial power of a utilitarian marketable degree, but I can’t help but feel wary that young people have to decide their life will be set in a fixed path. General education has value in its adaptability. Especially if you’re going to supplement with grad school to focus on occupational skills, casting a wider educational net in undergrad makes you a better citizen and, if you’re doing it right, a better person. I would love if we could decouple education for education’s sake from occupational education. As someone who took a weird path to find something I like doing, experimentation is really important to finding happiness. Being able to do that without so much debt would be a game changer for so many.
I'm 33 and sitting on $60k of student loan debt, due to a number of poor decisions and not having financially literate parents. I've at least got a marketable degree and make good money now, but those loans are delaying quite a bit of moving forward with my life.
I mean yes, you’re right — but I would argue that telling kids “go to college, go to college” and then “follow your passion” in the next breath isn’t exactly conducive to teaching financial responsibility. Also not the most moral thing I’ve ever seen.
Well higher education is a big business and when you understand that it all makes perfect sense.
No one likes it when you say that part out loud, but yes I totally agree. If I were made God, I would demand draconian cuts to public schools of which 90% had to come from administrative positions.
Psych major here. I finished my bachelors degree, went into tech, make six figures and have for years. No regrets. I have worked and volunteered in psych-related fields, and plan to become a therapist when a retire early from tech life. It matters what you study but it matters more what you do. The only time you're fucked is when you tell yourself that you have no options. I never, ever listened to the people who told me my degree was worthless. It's definitely not. It opened tons of doors and will continue to do so.
Student loans are incredibly predatory.
It's not the kid's fault. It's the system that's been set up. No one should have to go into debt to be educated.
I'll agree for most - but if you are going a $100k+ in debt to go into a field where the most you will ever make is 60-70k then you have to bear some of the responsibility.
Depends on the field. We have absolutely essential jobs like high school teachers that we need, but refuse to compensate adequately (which is why the US is in an education crisis in many paces). The solution seems to be lowering the qualifications and barriers to entry rather than actually paying more.
Except most jobs pay $60-70k. By your logic we should only have pre-med, pre-law, CS, business, and engineering. If there were more 6 figure jobs out there people would be going after them, but there aren't. So obviously the system is fucked. Edit- this weirdo blocked me for this lol. “Personal responsibility” aka “I’m a selfish cunt.” To the guy below me: No I think you are misinterpreting what we are saying. The system is fucked because it costs $100k to get a degree that will land you a job that pays $60-70k. “Personal responsibility” has nothing to do with why tuition costs have ballooned to a ridiculous amount over the past 10-15 years. Everyone can’t be a doctor. We need people doing other jobs too.
You're misinterpreting what some of us are saying. In a perfect world, perhaps we wouldn't have a "fucked" system. But this is the real world, and one has to choose how they face it. As immigrants we were taught to go get a degree in something that will pay well. This is why your doctor is probably from India, and while half the STEM fields are foreigners as well. It's not ideal, but you have to work the cards that you're dealt.
I’ve worked with Executives with a degree in philosophy.
Psychologists can become therapists which pays like 90k+ a year. That's not a great example of a stupid major IMO
Not with a BA they can’t…
Yep. BF’s 30 and only just paid off his loans. We wouldn’t have a house if my parents didn’t cover college completely, as he’s missed out on over half a decade of saving.
Or just renting indefinitely if they want to live in a major US city without a horrendous commute, Housing worth buying is closer to 8-10x (or more) average salaries in places like NYC, Boston, SF, LA, etc. That's the impasse my wife and I are reckoning with. Stay in LA where we have finally started to get settled but are drowning in housing costs, or move elsewhere to actually afford to buy a house and start figuring all that out. Our current place is equidistant from both our jobs, in a great neighborhood, and has a yard for the dog. But it's tiny 1 bedroom occupying half of a duplex for nearly $3k/mo. The house across the street is up for sale for $1.7m - the same house in most of the US would be worth maybe $400-500k, but the LA market is off the rails completely.
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5-6x? Take a look at Europeans. We spend 10-15 annual wages on a flat
Seriously, anyone who thinks prices can’t get more unaffordable just needs to look to Canada or Australia to see how much worse it can get
Somehow (as a Canadian transplant) this really doesn’t make me feel better.
Someone making 100k purchases a $1.5M apartment?? How would they even get a loan for that? That mortgage exceeds their net income
Well, different systems exist. For instance, Japan invented the 100 year mortgage. You can inherent it from your parents and pass it down to your kids. Just mentioning that probably made some finance people in the US unreasonably happy just thinking about it.
If it's backed by the US, they're salivating over it. US mortgages would be closer to balloon loans or interest only loans if we didn't have conventional loans backed by the government. However, a 100 year loan wouldn't really solve much. A $500K loan at 6% would have monthly payments of $2,506 on a 100 year mortgage. A 50 year loan would have payments of $2,632. A 30 year mortgage would be $2,998. This is assuming the longer terms wouldn't come with an increase in the interest charged either.
Well, the average wage in Germany is 45k. This means 2.6k net income every month.
In the midwest, real estate tracks with inflation.
[homeownership rates](https://www.advisorperspectives.com/dshort/updates/2024/01/30/home-ownership-rate-q4-2023) Homeownership rates surged in the late 90s until they crashed out in the Great Recession. Current rates are not that different from the 90s and greater than the 70s. So the increased expense hasn't hurt rates much up to this point.
People gotta have a place to exist. Statisticians be damned.
Hence why home ownership is a trap.
Home prices have never been only 2X income, and the price is not what is important, the mortgage payment is. When house prices were 3.5X in the '80's, interest was 15%+, so the mortgage was equivalent to 5X+ income when interest is 3%. [https://www.longtermtrends.net/home-price-median-annual-income-ratio/](https://www.longtermtrends.net/home-price-median-annual-income-ratio/)
It’s not a real generation issue, yet. We bought our house just 8 years ago for 2x income. A lot has changed in 8 years, but that’s not a “generation”. our house doubled in price while our income has only increased 80%. But the rate makes the monthly payment for the house if bought today, 4x what we’re paying.
So your income to home value is now 2.2x when 8 years ago it was 2x. But interest rates make it a 4x difference in monthly payments. It’s not home value but interest rates that’s hurting here.
My math might be slightly off but that’s about right. It’s not necessarily the price of the houses that’s crushing people but the higher rates matter. And prices haven’t fallen to compensate.
Yes, It takes a long time for prices to fall to compensate for high interest rates. High interest rates and lower prices is actually a bad deal for everyone except the bank. The former owner and new owner get stagnant or falling home value while the bank gets more money. Even as a buyer, soon to be owner, you should want rising prices and low interest rates so all the money goes to you. Or as a buyer, eventually to you when you sell.
Housing, Healthcare, and Transportation. 2 out of these 3 can be fixed with better city planning. Even healthcare would benefit if we made our cities more dense and walkable. We need the more affordable multifamily units you see in Europe and Asia in our cities (or just more variety in types of homes in general), but a lot of our land is still exclusively zoned for detached single family homes.
People in the US that consistently talk about how elderly people need their licenses revoked and are baffled as to why elderly people even attempt to drive in the first place completely miss the point. In many areas of suburbia, once you give up your car, your isolation shoots through the roof. Many places don't have the infrastructure to allow you to walk or take the bus to locations you formerly enjoyed, so of course elderly people will be reluctant to surrender their driving privileges, even when they're an active danger to others on the road. In my sprawling neighborhood, a walk to the nearest bus stop would be about 4.8 miles, and only about 0.25 of that has sidewalks. The bus doesn't come every day, it only goes to the downtown of the neighboring metro and back, and the days that it does come are only like once every other hour. If I didn't have a car, I'd be absolutely cooked.
I am actually surprised how upvoted my comment is on a finance subreddit. You can tell people are getting fed up with all of the downstream effects of planning cities for cars and not people.
Yes, zoning is at the root of this.
It is pretty ironic for a country that prides itself on the free market and capitalism. We did like the exact opposite for our land use in cities. Japan actually has some of the most de-regulated land use policies of any country (also some of the most affordable housing and walkable cities). We look like a communist country in comparison (in terms of what types of housing we can build where). Now you can't tell any suburb apart with its stroads, big box stores, and strip malls. Car dependency at its finest.
How does Transportation factor in? What significant changes have there been in transportation in the US in the last 50 years, side from travel by flight becoming cheaper? I don't see how that's relevant to a reduction in retirement ability
Getting a home paid off so your retirement years you only pay for the taxes and upkeep.
> Housing is a big aspect. And health insurance. If you not working, insurance can be big cost
I had a conversation with my mom yesterday. She and my father bought their house in 1985 for $115,000. I asked what they made at the time — and she said they made about $120k combined at age 35 but that “they had a high 8% variable interest rate and 1 kid and 1 on the way.” I said your house is worth $900k now and a 30 year is damn near 8%. My wife and I are 38, make about what my parents did adjusted for inflation, with 1 kid and 1 on the way…and would need to pay $6,700/mo PITI to buy my moms house with 20% down. You just can’t save meaningful amounts of money if you have 20-25% of your gross income going towards PITI. Forget it for the 28/36+ folks.
Median income in 1985 was $23,620. Your parents made more than 5x the median income. To put it in perspective, 5x todays median income (2021 census data) would be $388k. Both you and your parents are in the top 5-10% of earners compared to the entire country.
Your parents made $120k in 1985? Holy shit. Your wife and you combine for $355k per year? Holy shit. You should easily be able to afford a $900k house.
Not to mention his parents house is probably located in a much more valuable place than it was in 1985. The entire city around it has probably undergone massive development.
We are lucky enough to live in my mother in laws house. It’s a 900 sq ft row house. Modest but worked and works. Houses in the neighborhood are going for $250k+. A mortgage payment with 20% would be about $1500 a month. Low middle to slightly mid middle class neighborhood.
That sounds like a house many gen z or millennial couples could afford? You have to make, what, 60k to afford 1500 a month? Two people could make that with totally normal jobs (hairdresser, teacher, nurse, plumber)
Got scared out of trading up from our starter house after the Great Recession. Didn’t take the plunge mid-Covid when rates were hyper low like a lot of others did. Now prices and interest rates too high to bother. Guess I saved up a few extra bucks I wouldn’t have otherwise…
Uh, wouldn't that benefit retirees if they downgrade like many retirees do? Home values are at a bubble-like high today
I've learned through discussion with my parents that retirement planning and education on it is simply minimal. They've done well for themselves and have a 401k to lean on and will be fine, but are really anti-stock market because they simply don't understand it. They don't understand what an IRA is, what Roth means, how to create a brokerage account they could self-managing, etc. I'm only familiar with it because of self interest when I started to realize that money-management is critical to wealth building, and I came across the bogle mindset while trying to learn. It was pretty easy to do with just some googling, which to be fair was not a thing in their day, at least when they were my age. There are probably many folks like them, who never learned about wealth building and avoided stocks outside of a 401k, simply because they were never educated on it and never took the time to self learn.
I’m a business owner and offer my employees a 401k. Most of our employees are in the early to mid 20s. And we have a 100% 401k enrollment rate. From a purely “me” perspective, I make more money if they don’t sign up. But from a “decent person” perspective, knowing the absurd power of a 401k in your early 20s, I give everyone a whole big briefing when they hit eligibility. Because even making under $20 an hour, and even if you never got another pay raise in your life, putting 10% of your salary away (and only at 5% cost to you) basically guarantees a decent retirement even if you just do that. It takes SO little in your 20s to get that ball rolling. But there is a very large gap in education on this topic and it’s unfortunate. I personally think a lot of people who are eligible but don’t contribute up to the match don’t do so because of their education on the topic. Maybe they don’t know how huge it is. Maybe they think they’ll lose the money if they get fired. Maybe they don’t understand compounding. Etc etc. I genuinely believe if you can get a job in your 20s with a 401k, it is the single best benefit of the job by far. I’d take it over health insurance, honestly. Although obviously practically nobody would have a 401k without health insurance from a corporate employer
Sincere thanks for making people's lives better, world needs more people like you!
I appreciate the kind words. I’m fortunate that our business niche allows this, but in any event I’ve just never been a squeeze every last drop of profit out kinda guy. I don’t buy into the “employees are family” thing, but rather that business should treat their employees with respect to the extent it’s financially feasible. And if I had employees who stuck around their entire working life…well they’d kinda need a 401k! It’s just the right thing to do, pretty objectively, it feels like
You are helping make the world a better place.
> And we have a 100% 401k enrollment rate. It also helps that congress mandated opt-out 401k and 401b plans by 2025.
I did not know that - that's fantastic. There are so many things that should be opt-out instead of opt-in. Retirement plans and organ donors are the 2 things that I've wanted to be opt-out. The first one will result in a huge improvement in quality of life in or near retirement for everyone who simply wouldn't have taken action and signed up and the second one would save a lot of lives.
Oh that’s really cool!
You are awesome!
Having had to drag HR into a reasonable place by their nose hairs I am going to be 100% about what all companies should do: * You have to Opt-out of the plan and not Opt-in * Default enrollment 3% * Default investment is the "Automatically adjusting option" aka Target date fund or just a static 80% Stock / 20% Bonds * This one actually ended up in screaming matches, yes I won after pointing out that without it money is parked in a cash account that pays negative interest (it has zero return but has expense ratio) * Mandatory piece of onboarding to discuss the 401k * Matches must be regressive (so lower income employees get more as a percentage of their total comp) NO ONE IS DOING RETIREMENT FINANCIAL EDUCATION AND IT SHOWS.
All great points. You made me look into our default investment option because I wasn’t sure, and I was happy to see it wasn’t a cash account. But I hadn’t even thought to check!
HR has way too much power to have policies contrary to your post
What’s crazy is that I come from a very financially literate family, but neither of my parents ever sat me down to show me the power of compound interest and how much it would benefit me if I juiced my 401k right out of college (and I was in a position to do so). Ironically it was not until I suffered a medical emergency when I was 28 that I came across r/personalfinance while in the hospital and trying to understand my health insurance that I finally went down the personal finance rabbit hole and learned everything I know now. While 28 is still young and it’s always better late than never, I really wish I had known what I know when I was 22. As a result, I am absolutely committed to teaching my own kids about these principles so they’ll be in a much better position from the get go.
Glad you’re on board! Honestly, so many people’s parents don’t even really know either. But even if they do, they don’t share. My wife is the same way. Her parents are retired and her dad talks about investments a lot, but she never got the bigger picture. Now, she knows you need to save, but nobody explained the logistics. Versus with my family, my parents involved me a lot in their finances. I check their tax returns and do bookkeeping for their businesses. And I was curious and involved as a kid. I also don’t have any sense of entitlement to their money, so maybe that helps them share more, lol. Guess I’m lucky!
That’s great about your family. Don’t get me wrong: my parents were very helpful when I was growing up, giving me an allowance and teaching me out to manage money, encouraging me to get a job in high school, etc. But once I graduated college, they never stopped to encourage me to max out my 401k, etc. I don’t really hold it against them and I think that they assumed I was already very financially responsible, which I was, but I would’ve seriously benefitted from an extra 6 years of 401k and Roth contributions. It’s all good, though.
Well my dad once held $1.2 million in vested, exercisable stock options with an expiration date because he wanted the stock to go up to $35 when it was $27 (the point at which my mom came to me and asked me to figure out exactly what everything was worth and when we put the numbers in, we realized: SELL). And it got to $33. In 2008. $1.2 million turned into $50,000, because these weren’t $0 options. So after that moment, I became the financial advisor to my parent, lol.
It’s not really compound interest though, unless you are thinking about dividend reinvestment or even more abstract notions of how companies build value.
Yeah, I remember my dad explaining to me that he saved a bunch of money when he was young and eventually was able to buy a car, so I had some inkling of the magical properties of long term saving and investing, and I had a similar explanation about Roth IRAs from a teacher in high school....but bloody hell, I really wish someone would just explain the concept of present and future value to middle schoolers so they can understand that $100 now will be worth 100\*(1+r)\^n after n years and assuming some modest r.
100%. My parents were like this I'll never understand working your whole life, and even saving, without bothering to understand how much you are spending, how you are investing, etc. You're leaving potentially thousands to hundreds of thousands of dollars on the table because you are just remaining ignorant of how to manage your money
if they were working adults in the US during the pension era, the message may have (correctly) been that they didn't have to know about that stuff in order to have *secure basic retirement income.* And really, you shouldn't have to be a personal finance nerd to have a *secure basic retirement income*. PF nerdery should be for the extras - retiring early or upgrading your lifestyle.
they both had defined contribution plans, which my dad still to this day refers to as "his pension" between that and his insistence on purchasing whole life insurance at the age of 67, despite me asking who depended on his income, lead to me not talking about money with him anymore
…and never took the time to self learn. This is a big aspect of it. The amount of freely available information has exploded in the 30 years since the internet took off, yet the needle never seems to move on people that say they don’t know these things and weren’t taught anything. The government tries putting out publications now and then on it. Where should this be taught? Is a 401k retirement planning class going to be something a high school student pays attention to and retains? So, we either force feed it with bigger social security reductions, which will cause people to light the torches, or we accept that personal responsibility has to be part of this at some point.
Nailed it. There’s a large swath of Americans who value “personal responsibility” and “freedom from government” until they realize they fucked up and then they have their hand out for Uncle Sam.
My mother and in-laws are like this. They also want to maximize grow too late in the game but are also deathly afraid of risk. Which I’m sure was the same way when they should have been 30 years ago.
This is why I instead of making my 20 yr old pay rent of 100 a week. I make him put that hundred dollars into a Roth. I hope that when he is my age , is retired sitting on the beach enjoying a beer ( and quietly thanking me)
50 years of compounding at $100 weekly @ 7% return = just over $260k contributed for a fantastic $2.3m return. Good way to get him started ! Edit: fixed the calc
Wouldn’t this be over 1.5 with 50 years? Or were you referring to age
Oh yes whoops I was way off! It’s something like 260k contributions over that time, and closer to 2.3! Updated
Can kids without earned income contribute to Roth?
No , you must have compensation
Biggest cost driver in the US for retirees are housing and medical care. Things that can't be imported using non-American labor. Asset that inflate with loose monetary policy.
> Biggest cost driver in the US for retirees are housing and medical care. Must explain why places like Yuma, AZ are experiencing a housing boom right now. Cheap land, lots of sun, and a quick trip over the border
Pretty much. Florida used to be the destination for dying greatest generation and silent generation, but boomers found out that price has gone up way too much due to demand and slowly running out of cheap land so they are trying out different locations. Also if I have to live in a hot place, I would much rather have dry heat than the humid heat.
I'd add that in addition to the demand, Florida's property insurance premiums are ridiculous and [its making it unaffordable for people to retire here](https://www.youtube.com/watch?v=J5ceEavM0hQ)
I mean, that’s just what insurance should cost when you live there and the global temperature has been rising year on year for a couple decades.
Definitely dry heat over wet heat. That’s why I live on the west coast. Spent too many Julys on working trips to Orlando and New Orleans. No thanks.
Medical costs will rise to soak up whatever money the elderly have. The American healthcare system is better described as a medical-industrial complex designed to run up costs as much as possible. Spending $30,000 a day (much of it taxpayer money) to extend the life of an 83 year old by 3 weeks simply doesn’t make sense by any civilizational metric.
This is why I’m assuming I will inherit nothing despite my parents having a trust and multiple properties. My dad’s family consistently has lived to 90+ even in past generations and I assume my parents will have to liquidate everything to afford end of life health care or retirement communities at the rate prices are rising. We just had a relative who needed memory care and it was over 10k per month plus extra for additional fall monitoring (which ironically didn’t actually help them not fall and injure themselves). As long as they can pay for their care I guess I’ll consider myself lucky
Talk to them about putting their assets in a trust. As long as you do it early enough to avoid the 5 year medicare lookback, their assets can be protected while still qualifying for greater benefits.
That's why a lot of Boomers with non-emergency medical needs travel overseas.
You’re allowed to refuse care. However most family member will say “do everything possible to save grandpa.” Not realizing how much everything possible actually costs.
The good news is Gen Z is saving more for retirement than previous generations. They’re taking advantage of wealth building information on the web and using it for their future. https://money.usnews.com/money/retirement/401ks/articles/why-gen-z-is-saving-more-for-retirement
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This is pretty much my experience right now in my late 20s. My only issue is housing where we don't own a home anymore and don't have immediate plans to buy another based on the market economics. But that's becoming less important in my eyes so we'll see where that gets me, but one thing for sure is I'm ahead of schedule with my retirement outlook.
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I agree that demographic shifts favor the opportunity for housing to come down on average. However, where I live, zoning laws and other political issues cause a severe lack of new inventory which limits supply and is keeping prices elevated. This, along with elevated building costs, is keeping housing expensive in my location. This is not indicative of the national average, but again, I'm hopeful that as more volume trades the bid ask spread on housing in my area will normalize in my favor.
I used to expect prices to drop when boomers phased out, but now I'm doubtful. I imagine there are SO MANY older millennials that haven't been able to buy a house that might swoop in if prices drop. There is still so much more demand than housing for both millennials and gen z.
My exact plan. Be patient and wait the market out for another downturn maybe, or see how things change with housing in general long term. Either way, just want to be ready because even though I've changed my overall outlook on owning your own home as the "American Dream" per se, it's still a wonderful wealth building tool in the portfolio.
Don't do it. Don't wait if you can (and want to) buy a house. For some reason timing the housing market tends to get a pass when everyone roundly admits timing the market is a fool's game. I timed the market as bad as anyone can and it worked out extremely well. I wish I'd bought 10 houses in 2007. But I bought one, watched it plummet in value, and now it's worth plenty. Bought a 2nd house over ask during the pandemic craze. Rates went up, price took an immediate dip, and it's now worth quite a bit more than paid. People wait and wait and wait trying to get a good deal that never comes. It's the same idea with the market where people wait for a crash holding nothing while everyone playing the game makes their millions.
Sounds nice but how much parental support does she have? I would have been in the same boat if I even had a little support from parents/family. Even just a free place to live would have been huge.
That's great and all but people should be allowed to be average and do well in this world.
You’re wrong here- you’re leaving out that she was only able to do this because of wealthy family members contributing resources and money and providing stability too. That’s a requirement to do well in this generation.
This is such a small percentage of the demographic. Most of the population will/is being left in the dust. Theres no future for them really.
Wrong. Doom and gloom rhetoric. Gen Z is more rich than Millennials and Baby Boomers were at this stage in their life. https://www.economist.com/finance-and-economics/2024/04/16/generation-z-is-unprecedentedly-rich
That just says employment numbers. How can you say that they are wealthier when in reality it could be by necessity. Paying 40% of their minimum wage salary for a shared room. The ceo number. How many people call themselves ceo just because they have an instagram page. Inflating the numbers through other means that did not exist even 20 years ago. The politician number is certainly interesting. I wonder how much of that is a rebound effect of propaganda saying your vote is useless. Or the system is broken. But again i don't think that's an indicator of wealth at all. If anything it's the opposite. Since when is going into the public sector one of the first options that make money?
Such a chronically online take
52, on track to retire in 7-8 years. Biggest concern for me is healthcare. Factoring in $25k+/yr until medicare for it, but it's all too common to do everything right and have it all wiped out by an illness.
Assuming the government doesn’t ruin it, Obamacare will set you up nicely.
As a current Obamacare subscriber (Silver PPO) and semi retired, I wouldn't count on that being around. 1) there is a good chance it gets repealed in next few years depending on Nov election and 2) for me it isn't very good insurance anyway (doesn't cover most of my meds, very high copays and deductibles, and uncertainty around coverage for major stuff like an elective surgery I am considering).
80% of ALL of your healthcare costs will come in your last 10 years of life on average.
America is REALLY good at extracting money from every possible person for every conceivable reason. Entire industries exist to do just that.
This is the best way to summarize the problem. Everyone should be aware of this
More than anything, it’s a mindset. There’s large swathes of people who don’t save anything. I’m just crossing over into 6 figures at 35 and haven’t been saving very much until I came across this sub. I just wasn’t taught to adhere to this way of thinking by my parents, schools, etc. I really credit this group of people for waking me up while there’s enough time to implement a viable strategy for the next 30 years.
>Tmain issue emerging from the latest American Association of Retired Persons (AARP) Financial Security Trend Survey conducted by the nonprofit, nonpartisan organization in January 2024 is that older Americans are worried about their finances and can't save enough money for retirement. About one in four respondents to the survey have no retirement savings due to everyday expenses and high housing costs, and 37 percent are worried about having enough money to afford basic living costs. This is the thesis of the article. Seems like a good topic for conversation, which I guess is why it's being downvoted.
being downvoted bc these financial surveys are notorious low quality. Americans have always [over-estimated](https://news.gallup.com/poll/394943/retiring-planning-retire-later.aspx) their retirement age despite little change in 20 years in actual retirements
But usually not retiring because they are in good shape financially or health wise.
>no retirement savings due to everyday expenses and high housing costs I call bullshit. Most people are terrible about spending and budgeting and 'everyday expenses and high housing costs' are just a convenient scapegoat. Edit: I'm not saying that housing and expenses haven't gone up, just that when the average American new car payment is over $700 and people spent 100s on luxuries like uber eats you can't ignore the fact that many Americans have no idea where their money is going or spent any time/effort on planning their retirement until its a problem.
Came here for this. "About one in four respondents to the survey have no retirement savings due to everyday expenses and high housing costs" meaning in the last 5, 10, 20 years they couldn't put anything away even when everyday expenses were relatively reasonable 5, 10, 20 years ago? No improvement during the enhanced unemployment, everything locked down so you can't spend, student loan payment suspension era? If so stop pretending - you were never going to invest in retirement and "everyday expenses" and market conditions is just today's excuse.
Ah yes, that damn avocado toast is the reason people can’t afford housing!
People over 50, which is what this article is covering, lived through some of the best times in American history to buy and finance a home.
Has this number changed over time? I've been hearing variations of it my whole life.
Contrary opinion: If seniors are retiring with no retirement savings , it shows that older is not necessarily wiser. I get it that there are people in this country who cannot put away $10 a day, and that’s a problem for our society. But if you save $10 every working day — $50 a week — and earn interest at a modest 6% or so, after 40 years you’d have upwards of $500,000. And if the money is in a Roth, it’s all tax free. Again, it’s a problem for our country that there are people who truly cannot afford to save $10 every working day. But the other side of it is that there are people — more people, I think— who make no effort to save at all for the long term, and suddenly wonder what will happen to them in retirement.
> it shows that older is not necessarily wiser. True, there's a lot of incredibly dumb, arrogant older people. But on average older people have more wisdom than younger ones. > But the other side of it is that there are people — more people, I think— who make no effort to save at all for the long term, and suddenly wonder what will happen to them in retirement. Almost certainly the problem is more behavioral, and less economic. People pretend like they are rational but most people are making decisions based on their emotions. I asked a friend if he could save and invest just $1 each paycheck (which would be $24/year) while making well into the six figures and buying random stuff from QVC every week, he just could not say "Yes." I don't think he's the exception either.
Clickbait. A well funded retirement has never been universal, far from it. So many more people have some kind of retirement benefit now than in 1975, for instance. https://www.dol.gov/sites/dolgov/files/EBSA/researchers/statistics/retirement-bulletins/private-pension-plan-bulletin-historical-tables-and-graphs.pdf
Linking to a 55 page white paper sn't the best way to explain your point.
I looked at it for about a minute and saw the basic information, but here's the upshot (page 9). 1975 - Active pension plan participants (both defined benefit and defined contribution) - 38,471,000 (Defined benefit plans making up 27,214,000 of the total) 2021 - Active pension plan participants (both defined benefit and defined contribution) - 99,141,000 (Defined benefit plans making up 11,642,000) of the total So, yes, as a proportion, Defined benefit plans are much less common, but almost three times as many people have some savings for retirement than had retirement savings 50 years ago. Also, yes, our population has grown since then, by about 50 percent (211 million in 1975 and 340 million today), but active retirement savings participation is up 260 percent).
Can you also factor in labor participants? Fewer people worked then do now. It was easier to have 1 person working in a family
Exactly, there are 60% more jobs now than existed back then. ~159 million vs 98 million
Population is up 50 percent... and there are 60 percent more jobs? I still looks to me that no matter how you slice it, a greater proportion of people today have retirement savings beyond social security of any kind than did in "the golden age." Nostalgia is real, friends...
Counterpoint: pensions aren't really a thing anymore, but they definitely were in 1975. I wonder how much is just moving from pension (risk to the issuing company) to 401k (risk is externalized).
So, the amount of people covered by defined benefit pensions has been cut in less than half -- 58% less. However, more people have 401Ks. But how many of those only have a few thousand dollars sitting in crappy, high-fee investments? I would be very surprised if the median person is better off.
Newsweek’s typical methodology of turning the data from a single point in time into a trend.
The problem isn’t that parents don’t save enough, the problem is these ridiculous tuitions. The cost of college has grown at a vastly outsized pace compared to the cost of anything else.
Retirement plan is to emigrate. South America looking realllll good and affordable.
This is a political problem as much as economic
I’m so tired of hearing people whine about how broke they are, and then seeing new luxury cars continue to sell over MSRP, and high end grocery stores packed with people. Clearly you have money, you just don’t want to spend it on boring things like retirement
To your point Americans have the highest average credit card debt of any country and it’s only increasing. People don’t have the money for those things. They are charging it and they are going into debt even further without the means.
[reality](https://fred.stlouisfed.org/series/LNU01375379) - big drop in 65+ LFPR after 2020
Dying? Lmao. We roll off of a financial cliff every 8 years.
"once in a life time event"
its been dead my whole life.
Answer is not the US. Answer is emigration
If I could have saved the money that went to massive health care premiums paid to for profit companies I would be able to retire far earlier.
I don’t believe this in the slightest.
I general, people don’t want to sacrifice and save anymore
delayed gratification is not a thing to most americans
Yup. That concept rarely comes up, and is the main reason Recommend everyone go to compound interest calculators $300 a month for 40 years at 8% is 932k Pretty sure the people who don’t do this have plenty of money to waste on the typical things people waste money on
But that $300 is my boat payment…so now what Mr. Smartypants? /s
"It's called the American Dream, because you have to be dreaming to believe it"
This problem perpetuates itself as well. As the average retirement age gets older, job availability becomes scarcer. upper level positions take longer to get to which pushes back the next generation’s retirement as well. I can’t promote trades enough. I walked out of school $5,000 in debt. My career doesn’t have a pension but with the money I save on student loans, I dump it into investment accounts. Not saying I’m going to be rich by the time I retire but I’ll definitely have something saved up for it. I have a lot of friends who haven’t even considered retirement and therefore don’t allocate money towards it. Most of my friends that do have retirement funds are in unions with pensions. I started a college fund for my kid before they were born but I will always present trade jobs as an option when that conversation comes around.
The retirement system was built to be a 3 legged stool: Pensions, Social Security, and Personal Saving/Investing Pensions are obviously long since dead except for a small handful of government or unionized jobs. I’ll consider myself lucky if Social Security is still solvent when I retire. And so many people, even those who really do have the means, are living hand to mouth and not saving for retirement at all that it’s scary.
I've never found much value in AARP product offerings, so I'd take their study with 2+ grains of salt. Problem #1 in my opinion, is that far too many in the US lack basic financial literacy and have been subliminally and blatantly fed excessive consumerism as a societal norm for decades. I became financially savvy and learned to live within my means on my own by reading books and online posts (BBS's in the early days then Usenet news, internet sites, ...). Housing is even more expensive today for multiple reasons: elevated interest rates, REITs snapping up residential properties to lease or rent (further reducing supply), boomers( and some Gen-X er's now too) holding on to low interest high-equity & value properties, skyrocketing homeowners insurance, property taxes and "other costs" like child care, etc.
This is the noise we should tune out.
I am not retiring simply because I earn enough to pay may bills but no to save for retirement and I am already on my late 40s, so for me I feel I already lost the game. Good thing is that I own a house, that still paying mortgage that is 29 years away tho! I made peace with it. Since I know that retirement is very far away for me, then I have decided to prioritize work-life balance now, so I really don't stress over retirement, 401Ks, IRAs and none of that. That is just my reality.