It is amazing that the median is under $20k and the average is nearly $70k. This means there are some folks with very large retirement savings that are pulling the average up a lot. Considering this only includes folks up to age 32, this is really surprising. How much do these savers have socked away?
Even when I worked in a big law firm, I didn't put that much in my retirement account because I was mostly saving to be able to buy a house (in the Bay Area). I can't imagine who these millennials are that have so much in a retirement account — presumably they also live in expensive areas if they are able to earn so much?
Edit: Glad to see all the responses, including from folks who have healthy retirement accounts. It would be great if you could share where you live and whether you have bought or are planning to buy a home.
Keep in mind ridiculous house prices are only in a handful of cities. The rest of the country exists and is doing just fine, thank you very much.
I live in Houston and made $75k right out of school as an IT consultant. I lived in the cheapest apartment I could find in my favorite Houston neighborhood -- a place with a lot of art and nightlife. Despite it being a happening place, it only cost $700/mo in 2012.
I was a big fan of the finance blogger Mr. Money Mustache and lived cheaply, on about $30k/yr. The rest of my salary went towards paying off my relatively low school debt, then I funneled it all to my Roth IRA, 401(k), and ESPP. After maxing that out, I bought taxable investments too.
My goal was to retire in my mid-30s after making an average developer salary. From 2012-2015, my net worth went from -$30k to $150k. It's still rising, but not as quickly because my fiance doesn't have the same crazy ideas about money that I do.
I bought a 3-bedroom townhouse in a nice neighborhood right near downtown. I can easily afford it and I'm not even making 6 figures yet.
After the divorce, I have about $20K left after having to split it with my ex-wife, who had saved a grand total of $2.00 during our marriage.
I don't really have a point, except that some people are very good at saving, even from a young age, and some people will never save a penny. The key is starting young. As soon as you are able to contribute anything, even 1%, you get the advantage of compounding interest over time, which is the key.
Wow, that is brutal. I'm guessing common law state? Even then, shouldn't you have 50%? Was it attorney expenses?
Me and my long time girl friend have been really fortunate, no student loans and high paying jobs for the first 5 years out college. Our retirement portfolios are in a pretty good place right now.
Seems that at all levels of American society inequality is rampant.
I'm a young millenial in a low cost city in Texas with a retirement account balance over the average by quite a bit. If you have the money to max your accounts every year, its very easy. And I've already bought and sold a house while I maxed out my accounts.
Hearing the stories here makes me want to leave!
The biggest recommendations I can give for trying to save more money:
Make yourself work a bit – sock away more than what you would deem “comfortable” and live off the rest. You’ll be forced to really think about what’s worth spending on.
Get a roommate. I save probably $3,000 a year from this alone, and a big plus is that I get along just fine with him.
Spend frivolously on things that really let you have fun or relax – to a point. I like Mexican food, a good gym membership, and quality groceries. I don’t worry about what I spent on these items because I spend next-to-nothing elsewhere.
Start young. I opened my Roth when I was 17 and have maxed it out each year, in addition to maxing our my work retirement accounts the last few years.
A 32 year old has been working for about 10 years. S&P500 has been growing at 10.5% with dividends reinvested for the last 10 years. That means about $3500/yr in 401k contributions would get you to the average account balance. Take into account employer matches and that's honestly not as much as you expect it to be. Traditional wisdom is to put away 10% and employers have started to implement the auto-incrementing auto-enrollment features into their 401k plans that Richard Thaler has been promoting for the last several years.
We're actually gen x and have other retirement assets I'm ignoring here. But, this account illustrates real world performance that any number of tech workers could have reproduced in the same short time period. Not only that, but many are at an age where they could have been making contributions for 10-15 years now, rather than just 3-4...
Edit: apparently based of census data from 2014, so yeah he could be in there!
Pensions should be tax-exempt at withdrawal, or else be accessible. Otherwise what's the incentive, other than when pre-tax contributions are possible?
1:1 matching is almost unheard of now but was normal twenty years ago.
Contemporary jobs provide for "unlimited" (translation: uncompensated) vacation time...no 401k matching...sometimes even a huge copay for health insurance.
I am 30 and I have about $140k in 401k.
EDIT: Why the downvotes? I'm just affirming with a datapoint. There is an extreme inequality in America and I'm willingly acknowledging that.
I'll probably never own a home.
My future is pretty bleak, but I feel like that's the general millennial view.
Social security and Medicare will be gutted by the time our generation reaches what was once considered retirement age. There’s no longer such a thing as a pension unless you belong to a public sector union. Agism makes me concerned about being able to stay employed past the next 10 years.
And that’s all still assuming that automation-related unemployment and growing inequality don’t result in extremely destructive social unrest that tears the economy to pieces. (Or that it doesn’t collapse in on itself due to inequality leaving the masses without the disposable income needed to sustain a consumption-based economy.)
I do not own a home, but expect to convert most of that liquid savings if the opportunity does arise.
I do not make enough to qualify for owing a home in the area I live.
I also don't anticipate growth in the markets long term over the period of my life to retirement; I fully expect the unfinished recession will need to show a bug ugly period again with an ACTUAL market correction and I foolishly hope we'll finally stop chasing bubbles after that because it will be politically untenable to not FULLY socialize retirement and (at least basic) health-care costs.
Just out of curiosity, what's the difference between money in the bank and money for retirement? Should the retirement money go into a dedicated (investment? pension?) fund? Can't they be your savings that you manage by yourself?
I'm asking since I was raised with a different background with pension in Europe being a very different concept from the US.
1. A higher percentage of the population back then were working towards a pension and didn’t necessarily have to save.
2. The long-term health of social security wasn’t as much in question back then. Contrast that to today’s conventional wisdom of “plan like your SS payout will be $0.”
And there are probably several other factors that suggest millenials should be more eager to save than their parents—rising costs of college for children, rising costs of end of life care, ever-increasing lifespans suggesting longer retirements, etc.
In all fairness, people have been saying that for decades.
You're right though that a lot more people used to have defined-benefit pensions. I'll even have a modest one from a long gone tech employer. Certainly don't see that much these days.
I would have fallen into that bucket when I was that age. Hey, I wasn't always a highly-paid software tech. I expect to retire comfortably with a couple million, and I didn't hit the startup lottery. (One or two that paid off very modest five figures, and late-90s MSFT options.) After a point, it's time to start putting some money away, and after 35 you can pull it off if you're aggressive. We haven't always maxed our 401Ks out, and missed other opportunities, and we'll still come out okay.
But that's for you tech bros and sis's making bank. I don't know what Mr. and Ms. Median-US-Wage are supposed to do.
https://www.fool.com/retirement/2018/01/29/guess-how-many-ge...
I'm not confident that I'll receive social security. Huge health expenses may come up.
How do others feel? You're not all billionaire unicorns on this site, are you?
This is a common sentiment, but it's a strange one to me. I think it's extremely unlikely that a program as popular as Social Security is going to just disappear. Entitlements have alligator blood. They're going to be really hard to get rid of.
And, anyway, it's pretty foolish to think you can predict what's going to happen in politics 30 years from now. 30 years ago the Soviet Union still existed and nobody had heard of the Internet. And people want to tell me they know what's going to happen with Social Security?
What the something is I don't know. There are lots of options. It is entirely possible that the younger generation realizing that the money isn't there will decide to scrap it. It is possible that taxes will be raised to pay it off. Maybe the government will borrow money to pay for it. Maybe benefits will be cut (this is already happening via inflation, but the effect is small). Maybe the retirement age will be raised. I don't know what will be done, but something will have to happen.
As you said, anything can happen in 30 years.
No, they are telling the exact opposite, that they do not know what is going to happen to social security. So they are not confidant that they will receive it because they do not know what will happen to it.
The consequences are serious and the time it takes to determine whether it's worth worrying about is in decades. It's like global warming. If you wait to find out what happens, it's too late.
In South Korea, suicide rates are high because there is no social safety net. Old people just kill themselves. If SS gets made effectively defunct, what recourse will 2/3 of the aging population with no retirement have?
Heh. I don't have anything now either, but to be fair, I'm now a seasonally working spouse in a different country than I lived then :D I'm not so worried about it. Even if I'm poor, I'll be OK.
https://www.cultofmac.com/284247/rare-original-4gb-iphone-la...
If that's the actual reason why retirement savings are low, then this sounds more like a paper crisis than a real one. If you're putting $30k a year towards paying down student loans or home equity, then – assuming nothing changes – eventually you're going to "fill" those buckets and start saving $30k a year for retirement, which over the course of a normal career should be plenty to retire.
That said, I have my doubts that millenials' low retirement savings as a group is really because they're saving in another bucket.
I bought a house 10 years later and have generally done a decent job of saving money but, depending upon your priorities, education choices, etc., I'm not sure that not having saved money for retirement in your 20s (except perhaps to the degree that you're forsaking 401k matching, etc.) is automatically a sign of poor money management.
Any plan that has death as a pre-requisite to be successful is not a very good plan in my book.
Acquiring income producing assets seems like a much better plan.
Income producing assets produce income while you still own them without you having to sell them.
Dividend paying stocks would be an exception.
Not suggesting putting all your eggs into a single owned company. That's a separate issue.
https://dqydj.com/income-percentile-by-age-calculator/
It’s about $45K for a 35 year old.
32, living in down south in New Zealand. Working for clients around the world, mostly in the UK.
Making $150-180K per year.
Bank accounts $15K in NZ ~$50K in the UK account from client payments over the last few months
Own the house we built for $580K in 2016, it has recently been valued at $650K. Have a mortgage on that of $320K.
Have another mortgage of $180K on a $260K house split with a friend when we brought a rental property at the start of this year.
Have about $10K worth of crypto, down from dizzying heights at the start of the year :D, from a $4k gamble just over a year ago.
I think we have ~$20K in a superannuation accounts, which we haven't put anything into since I've been working for myself.
Interest rates on the mortgages are 4.19% p.a.
Other than the mortgages we have no other debts. We being my partner and I, our 1 year old, a dog and 2 cats.
On one hand I feel like we're doing OK. But for the amount I'm making I feel like we should be saving / investing more.
From the sale of my company.
My favorites are: https://money.cnn.com/2014/05/02/retirement/retirement-mille... https://money.cnn.com/2015/05/06/retirement/retirement-savin...
written almost exactly a year apart and contradicting the other articles
What are good resources to learn more about saving for retirement? IRAs, 401Ks, etc.
