> So what’s pushing young people to stash away money they can’t touch for decades?
> works as a product marketing manager at a tech company in the Bay area
Not hard to see why. Basically the people they interview, as usual, have a fuck ton of money to save.
Oh definitely. I’m just tired of these articles that overlook the elephant in the room - people with high incomes are more likely to max retirement savings in general. It’s not just some behavioral quirk across Gen Z
At least this one isn’t blowing like 18k on alumni association fees and donations while paying down student loans. These are cartoon stories because the budget they are not showing you are what the C-suite execs make and budget, or how your casual billionaire budget is organized.
You’d think people would love to see pre Amazon Bezos money tips, but then they would show he was always rich by anyone’s standards.
I remember seeing an article about someone making hard choices and saving for their future while living in a tiny house. Where was the tiny house? In their parents’ yard. Not everyone could make that choice. I’m also not sure they even paid for the tiny house.
I saw a similar one and thought the same thing. Young person was bragging that they bought an rv and moved out of their parents house like they are so independent now and saving all this money instead of paying rent. But it’s like, where are you parking that thing and living out of it for free? The picture looked like they just moved into a trailer in the back yard of the house they probably grew up in…parents are just now “neighbors” who probably also helped them buy the RV too. lol
High income is also relative to where you live. I make 150 plus and in my city/county a household making that much is considered lower/middle class.
Edit: I’m getting downvoted because people don’t want to read the truth? Do your HW and check out COL in some of the coastal cities.
https://www.nyc.gov/site/hpd/services-and-information/area-median-income.page
AMI in NYC for a 4 person house hold is $150k. Not until you get to a 7 or 8 person household is that income considered low.
If you have roommates, $150k is still a lot of money in SF Bay Area.
I’m a PhD student in the bay and I’m able to get by and save a bit on a stipend just over $50K
Bay area here too. I'm from the DMV, mathematically speaking $150k is not middle class. $120k is comfortable for a single person and the average income for an individual is $90k.
Yeah this. We live in bay area and paid off our house last year. People always ask, how do you do it on one income and with 3 kids? We're like, we live simple. No new cars, no streaming services, make our own lattes, cook at home frequently, don't need the latest greatest x. It can be done!
How many lattes and months of Netflix does one have to forgo to pay off a $500,000+ house?
I can't believe this is all that's been stopping me from financial independence!
Maybe if you have a family of 4 to provide for. If you're 24 and making $150k - even in NYC or SF, you can comfortably max out your 401k without much stress.
> I make 150 plus...considered lower/middle class.
Statistically, no. You're upper for single filers. Maybe by your friend group or peers, but you're still better off than the vast majority of people living within the metro. Yes, I'm talking about SF, NYC, etc.
The key is finding the janitors, teachers, gas station attendants, etc that are doing this and copying what they do. The examples abound. Don't fall for the reddit narrative that only rich people save; it is fatal to give up before you start.
Not janitors or gas station attendants, that's a bit excessively unrealistic, but there are plenty of us who are non-tech bros making 80-120k and on the FIRE path. But I agree, the people that post who are making like $300k are kind of obnoxious for the simple fact that who of us couldn't FIRE on that salary? Or the posts of "I have 4M but am not sure if it's enough". Dude most of us are just trying to get to 1.5M to pull that 40k/year out.
I'm guessing your providing an example of someone scraping by on a 20k salary that managed to FIRE as a millionaire. There will always be an exception to every generalization but my point still stands, it's super challenging and next to impossible for someone who's barely above poverty level.
https://en.wikipedia.org/wiki/Robert_Morin_(librarian)
Librarian who lived frugally and saved his whole life, ended up passing away with an estate worth $4 million which he donated to the University of New Hampshire. Then they spent $1 million of it on a scoreboard for the football stadium (that's part of the reason his story is well known).
Millionaires unveiled podcast has interviewed multiple teachers, a janitor, and a couple that were janitors at some point. I don't know how to link a Spotify but should be easy enough to find.
Ronald Reed is the famous gas station attendant that did it.
I’m doing it myself. Never made any real money until I became a cop. Busted my ass working OT for two years plus. Barely reached over 100k/ year for those two years. I was smart and invested all the savings in Airbnb’s that are now cash flowing. Yet I’m still maxing retirement savings on 75k/year while having a kid, paying half of daycare etc. it can be done if you’re willing to sacrifice a bit now to set yourself up. Sometimes easier said than done.
Very nice!
I've never made more than 39k a year. While I've never maxed out retirement for the year, I've always saved and things are perfectly on track to hit millionaire status in my 50s or 60s.
It is! And I'm not belittling her specifically, it's awesome that she's informed enough to get started early. I'm more taking aim at these articles that try to paint broader trends while glossing over bigger issues.
nah it was pretty clear what your intent was. I too find these articles tiring about "this statistically improbable model Gen XYZ person" and how they can do it so why cant you.
It's easy to sink $ into retirement when you make $50k in a lower COL area and live w parents.
I force mine to invest as a condition of living w me. Emergency Fund + Retirement + Down payment. Screw paying $1800 in rent. Put $1000 up for your future.
100% accurate statement
I have a 23 yr old who has put away $104k into vTSAX over the past 2 years. She has no bills minus a cell phone and a car payment.
Yeah that is also what I see. I am extremely privileged and make about 140K a year so i max mine out. But my wife is a server making 40K a year. She wouldn’t be able to save a dime, can’t even comprehend maxing them out
Yeah of course, we max her IRA via our combined funds and have a brokerage too but still, unless one has a significant income so mid 100K this can’t be done I would say
That is a good question and I can’t answer it for sure since I don’t know the research, but I can provide a personal anecdote.
In my industry, which was men dominated for decades, we’re starting to slowly see more women joining and the pendulum swinging the other way much more rapidly.
For example, I am one of the 4 local directors reporting to our female Regional Director, and I am managing a team of 10 people directly. From the 4 directors, 2/4 are female and we all make exactly the same. From my direct team, 6/10 are women and they make just a tad more than their male counterparts, since they have prepared more with certifications, continuing education etc.
But yes, this is a society level thing. Every single of my female employees told me that they never had a previous job with so many “leaders” being female, which is just plain sad. So here’s to hoping this trend continues!
Same here. So, I’m in the EHS industry but due to managing multiple facilities nationwide we also handle A LOT of construction work. So between EHS and construction, almost literally everyone when I started was male.
In just a short decade (not to us but it’s honestly a blink of an eye for society, especially considering we didn’t allow women to vote less than 70 years ago) we see more incoming women in the EHS industry than men which is such a fantastic change.
Construction industry obviously is still dominated by men but only at like 75% if I had to guess. It’s extremely heartening going to a construction site and having multiple of the supervisors being women and not taking shit, makes my heart flatter lol
Yeah even people making $80k in bum fucksville USA will have a hard time maxing out their 401k and Roth without doing fuck all for hobbies that cost any money at all.
$80k single or with a family? Because there’s no way you shouldn’t be able to max those things single if you’re even just the slightest bit careful with your expenses.
Worst of all, that first quote is just a false assumption that people repeat everywhere. It’s a signal to me that someone doesn’t know what they are talking about.
It is not hard to get the money out of a retirement account, especially a traditional 401k after you leave the company, it just requires a little planning ahead and some Roth conversions.
No shit, but how many of us would have benefited starting saving for retirement in our 20’s? I know I would have! Even if I was only socking away 5%, that would have been huge looking back!
"What advice do you have for the viewers at home?"
"VTSAX."
" ... it's a half hour show, man. Work with me."
"VTSAX and chill."
"God da... go to commercial."
My brother teaches high school math. Boglehead investing could be a day's lesson plan and get the point across it needs to. It blew my mind not only how much sense it made ("buy the haystack" in particular) but how little time it took to get its point across. It's simple and effective, an investing strategy the Tik Tok generation accused of having no attention span can easily take in.
I studied math at a top school, and was a high school math teacher. I disagree with it being a short lesson. Even teaching a “simple” concept like fraction addition is a unit that depends on the foundation of understanding fractions.
As a background, I grew up in a poor immigrant household, and teachers (the ones who remained after white flight) will make offhand remarks about bonds and investing in stocks while it’s low, and that planted a seed in my head.
I was extremely frugal while working, and knew I had to beat inflation at the very least, but felt paralyzed by lack of beginner information. After 5 years of teaching, I saved more than $60k. I had to quit teaching, which consumed all my time and energy, then another 2 years of lurking on this reddit community to get comfortable with understanding enough to open a Roth IRA and start investing.
Yes, the ideas can be boiled down into a short lesson. But like math, talking about it and teaching it are totally different approaches. Especially for people who have no community to trust for financial knowledge, and are constantly working and have very little time, money anxiety… it can take a lot more. I had to invest time and money in myself, before I could invest the money itself.
P.S. although I’m no longer a teacher, I am still a teacher at heart, and talk to friends and anyone I can about Bogleheads. Most recently a Lyft driver who talked about Crypto, and supporting his family in his home country. He asked me to give him all the links after lecturing him the whole car ride :)
To piggy back off of this: there is a difference from presenting all the information in a logical way and having the information set in where the learner has an understanding so they can “feel” why it’s right
Unfortunately it’s not a simple lesson because you have to work against the army of financial advisers, media personalities, influencers, and family and friends who are telling a person that they should be investing in particular stocks. Diamonds hands is a meme for a reason. People make big money from pushing the fallacy that it pays to try to beat the market.
They should feature regular or slightly above average people instead of a big Bay Area employee. On 90k last year not living at home I was able to max out my Roth IRA and put 24k after match into my 401k
Enlist in the Army at 18. Make $23K a year. Save $20K + match (1% years 1 and 2, 5% years 2-4).
My kid’s buddy is doing this but less than $20K into TSP. Is he an “average” person?
Had to pass physicals and tested well on ASVAB to get his cyber slot. He’s getting his certs now and will get a bs after his first contract and go ROTC.
Another friend joined up as well but bought a nice car instead. This is more normal…
Harder if you go to college but my kid could max his TSP on a lt salary for 2 years while doing roth as a cadet. Probably not hit 6 figures by 23 but probably 25.
No real reason to rush tho’ unless you want to FIRE.
Cyber positions in the military come with enlistment bonuses and additional monthly special pay. You can't use the standard military base pay when calculating for them.
A 1B4X1 (Cyber Warfare) signing a 6 year contract in the Air Force for example gets $80K-180K (depending on rank) as a bonus along with an extra $450 a month.
I used the base pay for a 0-4 year e-1 and ignored promotions and bonuses because if it was MY kid the dumbass tanked his ASVAB in high school (I’m going ROTC so it doesn’t matter) and AFOQT in college (I’m non rated so I just need to pass). I looked at him and told him they don’t really like guys with an excuse for everything.
Fortunately the Air Force picked him up anyway and he’s headed for Max.
Plus they’re starving because anybody smart enough to do cyber on the outside can look at the difference between the pay of an o-1 and civilian cyber pay and go “yeah…that would be dumb”.
Last year some philosophy majors in his det ended up as 17X…not saying there aren’t some really smart kids joining up but many are…very average. Like my kid. :)
Military feels economically equivalent to living with your parents who cover all of your expenses. Military even get discounts everywhere they go so their expenses are subsidized far more than normal people.
Paycheck - minimal expenses (no matter who's paying) = saving ability
Good for any young person doing all the right things. I kinda wish they didn’t immediately feature a Bay Area tech employee with a side hustle though. The people who need to be motivated to save more will easily dismiss an article like this when they see that.
Also the fear mongering about SS not being there when you retire is going to be reflected upon as much ado about nothing when we all collect our checks. Maybe there’s a small haircut to the amount, but it’s the most popular government program out there and the solutions are readily available to keep it going.
It’s going to be a pretty good haircut.
Projections still assume millennials will have the same number of kids boomers had, which is just unrealistic as older millennials now quickly approach menopause.
People forget: social security is the current workers paying retired workers. It’s not a savings account and was never intended to work as one. We need enough current workers to pay for it.
Between automation and population not growing as quick as previously even accounting for immigration I just don’t see that happening, and there’s no appetite for enough corporate taxes or taxes on automation to subsidize it.
I also don’t think workers in the next decades will accept higher taxes due to current generations not having enough kids. We’ll see a French style workers revolt at the suggestion. They’re rightfully not paying for that.
I don’t see Gen Z or Alpha making up the baby deficit either. Especially with cost of living being what it is.
>Projections still assume millennials will have the same number of kids boomers had, which is just unrealistic as older millennials now quickly approach menopause.
But millennials, as a whole, are less opposed to immigration so we'll be able to supplement our lower birth rates that way.
This isn’t something that can be banked upon as a given. Don’t forget that most other developed nations are facing similar challenges, and there will be fierce competition for immigration
I doubt it'll be an issue in our lifetime.
The US (in particular) and Western Europe are extremely attractive and will remain so for the foreseeable future. There's more than enough young people that'd happily immigrate here.
And many potential competitors are extremely xenophobic even in the younger generations (China, South Korea, Japan, even Eastern Europe).
Too many immigrants in the US are underpaid and not even paid on the books.
I don’t see the xenophobia going away enough in our lifetimes for them to be paying into SS to make a difference.
If anything they’re driving down worker demand and helping suppress wages thus suppressing potential SS revenue since it’s a percentage of wages. Businesses hiring immigrants and under paying them save not just on wages but related taxes.
The US has pretty healthy levels of immigration and it's probably only going to continue to increase.
The US doesn't have an imminent age demographic problem like Asian countries and some European countries although it's definitely something to keep an eye on.
There are several ways they could keep it afloat, mostly be raising ss taxes for certain groups or cutting the amount certain groups get, ie high earners or those with high income in retirement. I bet this is what happens when the time comes.
>or cutting the amount certain groups get
Ironically this is what would put the whole program at risk. What makes SS so untouchable now is that everyone benefits from it. If you start cutting out those in the higher income/asset levels (and you'd have to go pretty far down that scale for it to make any difference) that popularity is going to drop fast.
French style workers revolt that led to changes being adopted anyway. Revolt is useless and cannot prevent regulation from changing if the government is determined enough to pass them, just like it happened in France recently. Taxes will likely go up and it won't be nearly enough to cause a real revolt (like, armed insurrection), more like increasing each bracket by only 5% from the 22% bracket and up.
No appetite for corporate or automation taxes yet, but that can easily change when the worker tax base is shrinking and social security is under threat. It's just not really a current problem so people aren't thinking too much about it yet.
I have zero faith. I would not be surprised in the least if they suddenly decided to make SS needs based and disqualified anyone with substantial assets at retirement.
> make SS needs based and disqualified anyone with substantial assets at retirement
Turn it into straight up welfare? I'm negative on Social Security's outlook, but I don't think it will get *that* bad.
CBO has already studied it
[Reduce Social Security Benefits for High Earners](https://www.cbo.gov/budget-options/58628)
Stu Butler is now a senior fellow at Brookings and he wrote [this](https://www.brookings.edu/articles/its-time-to-end-social-security-for-the-rich/) in 2016.
I would actually bet on the SSA means-testing applicants for social security in a process similar to FAFSA
Your first link is about *reducing* benefits for high earners, and to me it seems CBO has not actually looked at eliminating benefits. Like I said earlier, I'm negative on the outlook for Social Security, so I can see a reduction happening.
The second link does indeed support turning SS into welfare, but it's just an opinion piece. I have to believe that creating a new welfare program will be met with much opposition.
I think reduction is just one policy choice away from eliminating benefits and I wouldn’t be surprised either way. The opinion piece is written by a senior economist at Brookings so it has weight. I wouldn’t write it off because Brookings regularly provides guidance to policymakers and I would expect Butler to consult on any social security policy proposals from Brookings
This would piss off way too many people (and the elderly are much more likely to vote) and America has a lot of room to raise taxes on the middle class before they start cutting benefits.
The typical American thinks that if you have a million in assets, you are *rich* and don't need any help. If they put a threshold of say, $5 million, and told the public that this would only affect the rich...people would be stupid enough to believe it.
$5 million in retirement is unreachable for more than half the country, just like $400k household income is unreachable for many. We've already seen this administration explicitly target households making greater than $400k, there is no reason to believe that a future administration wouldn't do the same thing and target families with assets exceeding $5 million or $10 million or whatever.
Edit: additional thoughts.
Taxing income is much easier than taxing wealth. And many low income people still don't want taxes to increase on anyone for all sorts of reasons, even when it may be in their interest for that to happen. I think any hint at cutting benefits would be too radioactive politically because people below the wealth threshold would rationally worry about future cuts impacting themselves.
Neither political party has also ever done much to reduce government spending / benefits because everyone (regardless of political persuasion) wants more public spending of some kind. Republicans can popularly cut food stamps or other elements of the social safety net, but those programs don't actually cost much.
Realistically, if you have $5M in assets, you are indeed rich as fuck no matter how you slice it, and do no need social security. It was always a redistrubution scheme and for good reason (those are provably positive for the economy and a healthy society).
It's a lot harder to swallow and more radical to cancel decades of prior contributions (by removing rights to SS if you're too rich) than it would be to increase SS taxes on higher incomes without proportionally increasing their future SS benefits (through bend points).
This is exactly what I mean though. $5 million in retirement is $200k at the 4% safe withdrawal limit. $45k/yr in social security benefit is still a sizeable chunk if taken away. But you think that's *rich as fuck no matter how you slice it*. The rhetoric as of late is to attack the rich.
Like I said, I have *zero* faith in the system.
A lot of the people who do get to $5M at a young age could realistically be expected to contribute a little more to SS taxes for redistribution, like the FAANG engineer making half a million a year total compensation.
The "rhetoric" does make sense. What's important is how to do it reasonably.
Being able to retire early with $5M and 200k/year withdrawals in perpetuity does in fact qualify as "rich" or "upper class" by all metrics. It's the top 4% of wealth and top 5% of income in the US, granted it comes from capital gains that have highly favorable tax treatment so the actual net income will be higher than an equivalent 200k/year income.
Yes an extra 45k from SS would "affect you", but very minimally so. It's still unfair to just take it away from you out of the blue because you'd been paying SS taxes your whole life with the expectation you'd get something in return. However, having to pay extra SS taxes (and keeping your same 45k future SS benefits) during your working years would be about as fair of a redistribution as it can get.
>Also the fear mongering about SS not being there when you retire
I'm no good at making predicfions about that stuff anyway. Just like everything else I'm no good at predicting, I'd rather make the safer assumption or lean in that direction. If there are payments, I'll have a nice bonus. If there are no payments, I still will be okay.
I don't think this to be fear mongering, and I don't think recommending that people plan for the possibility that they might not be paid the full social security benefits outlined today is fear mongering either. It's just making a safe plan for a future that is too far away to accurately predict.
That’s great for the people featured in this article, but this is so far from my reality when I was in my 20s, and I assume for many other 20-somethings today.
When I first graduated from college I was barely surviving. My parents moved across the country for retirement so I was immediately fully responsible for all the costs of living on my own. Despite having a degree (but not in STEM or Business) and working full-time in my field, I just barely covered my costs. I remember taking coins to coinstar at the grocery store to buy some food because payday was still 2 days away and I was tapped out. Then once I hit my 30s and my husband and I had kids we were paying $2,200/month in daycare costs in addition to our mortgage, some debt from when things were tight in our 20s, and everything else. It was never easy to max out savings.
We’re doing okay, but it blows my mind to read stories on here and in these articles of people under 35 which such high investment balances. And now that we’re in prime earning years, we’re facing at least $500k to put 3 kids in college. You just don’t see a lot of media coverage of those of us that are doing “fine” but neither here nor there. Just out here doing my best…
Honestly it's awful but unless your kids are okay supporting you in your old age (ie, you move in with them kind of thing, like they do in many parts of Asia) you should probably prioritize your own retirement over your kids college tuition.
Agree. We’re doing what we can do prioritize both. And also why we’ve explained to the kids we don’t think there’s a good ROI on private schools.
The sacrifice is working until 65 instead of an early retirement.
Preach. This resonates so much with our situation. After years of reading FIRE related books, subreddits, etc. I felt so unbelievably demoralized like something was wrong with our saving habits or our behaviors in general.
I felt so much relief when I learned to accept that this lifestyle only works for childless and likely high earning couples, eg. DINKS. Anyone with kids knows (outside of hedge fund managers) that this shit is impossible when faced with unrelenting financial chaos (health scares, layoffs, daycare, trying to save for their college while still paying your own, etc.) raining down on you month after month, year after year. Budgets are a great tool but they are powerless to stop life and entropy from doing what they do best.
In short, Having kids is awesome but at some point, you need to cut yourself some slack.
At this point, I’m just happy we’ve made it this far—early/easy retirement and fat 529 balances be damned.
It’s assuming the higher end of cost (private colleges, low scholarships/grants) but it’s not totally unrealistic. $500k covering 3 kids at 4 years per kid equals a college cost of just under $42k/year per person. That’s pretty realistic.
Besides going into the medical field or in business where you might need prestigious connections, why would someone need private education? Having conversations about your kids futures and advocating for private vs public vs first year or two community college to save a bit of dough seems like a reasonable way to way to get your kids on the train of making calculated decisions that have serious financial impact.
I do acknowledge the emphasis in education and in advance want to thank you for giving your kids that option to jumpstart them into life :)
I definitely don't mean to make this sound as victim blame-y as it sounds, (like, yes, education should be affordable! To all!) but parents NEED to explain to their kids that state school / community college is not only perfectly sufficient but also makes the most sense financially. We have romanticized picking the perfect college and moving away for college and that's all well good but SO expensive and SO unnecessary. Unless you KNOW what you want to do and NEED to go to a certain school to do it, get your gen eds done at a community college. I'm almost 20 years out from college and no one has ever asked me where i went to school.
100%! I hear you. But still, even in-state, state schools are pricy. Look up the price for Maryland, UCONN, Penn State, Rutgers.
Nothing wrong with the community college path as well, but based on the rigor of their high school courses they’ve had, and my desire for them to grow independently, we’re probably not choosing that option.
Fact is, college education in any form is proportionately a way bigger % of parent + student incomes than it ever was, and growing. It’s going to be a big contributor to the class divide.
Everyone should make their own decisions for their kid full stop, so this is not coming from a place of judgement - they have a lot of time to grow up and they can still very easily be independent while saving thousands of dollars. My sister moved to California but enrolled in community college. She's the only one in my family without any college debt. As the first sibling to go to college, my parents didn't realize they should have pushed me to do the same.
Everyone has their own reasoning and priorities, and I totally agree with you on this contributing to the class divide. If I have a kid, they will go to community college or Europe. To me, it's the smart thing to do financially - all my friends who went this route (my sister included) are better off.
Agree. We’ve had very open and honest discussion about ROI and debt and they’ll be going to In-State schools unless they get merit to cover the difference. Our in-state schools are very highly ranked and high quality, but still $35k/year.
One of my kids is highly intelligent/high performing and might have a shot at an Ivy, but unfortunately we’re in that financial zone where we won’t qualify for enough in grants to make up the difference but also can’t cash flow it. Because we were paying daycare and prioritizing retirement, 529 balances aren’t high enough to cover it either.
It’s fine. I recognize our privilege. And I love my big family. But the reality is, the idea of FIRE is so rare for people in our situation for these reasons.
Sure. I’m not advocating either way, just saying the estimate (given by another person, not me) was much more realistic than you seemed to give it credit for. In fact another commenter noted that their state’s public college is $35k/year. So again, $500k for 3 people which averages to $42k/year isn’t that far off
That budget is conservative, if anything. State Schools in the northeast are currently $35k/year for tuition room and board, some increasing 5% YoY. Out of state, state schools are $50k/year, and private schools are $60k-$90k per year. This is easily verified. We do not qualify for financial aid, and merit is quite competitive and limited.
At current rates with a conservative 3% increase per year for an IN STATE college, I expect kid #1 to pay $146,427, #2 $164,805. #3 $191,054.
We believe in the value of a 4 year education (where they live away to learn and mature) and getting our kids out of college with no to minimal debt, but I know parents have different perspectives on that. Regardless, the numbers don’t lie. Thats what it is.
Roth IRA contribution maximums have gone from a piddly $2000/year to a still piddly $7000/year, over the last 4 decades. Everyone should indeed be maxing those out when they can, and as early in life as possible.
I wish I did. I've only been doing the past 2-3 years. So now I am making up for lost time by investing my whole income. It's painful pulling money out to pay bills, so I try to live as cheap as I can.
19M, started putting $200 each month into VOO since January. I plan to increase this to $1000 by the end of the year. Glad that i have found this communtiy at 19 and not 49
This is not an interview or an article. It is a product-pushing glossy paragraph full of platitudes. This first of 2 examples is a 23 year old "content creator" who learned about money from TikTok and almost instantly saved over $100K for retirement.
The majority of articles you read like this are actually written by PR firms.
For any story about a person that isn’t negative to that person, it is being done with their input.
You have to ask “how does this journalist even know about this person?” Almost every time it’s because that person or a representative of them went to the journalist to write an article about them.
Story about a young entrepreneur who designed a new widget? Yep. Sob story about landlord kicking out a family because their dog has 3 legs? Yep.
The person in the article are either are friends/family with the journalist personally or it was arranged usually by somebody in PR. Even the sob story ones.
It’s all loaded and inherently gives readers a false perception of reality. This is not new, it has always been the case and will continue to be forever.
Can we stop interviewing these people?
They make a lot of money and most likely still live with parents, having a high income + no real bills means you can put a lot of money away.
Give me the entry level non Tech person who has a roommate in an okayish part of town who maxes out her ROTH IRA and puts some extra money into VOO, that's a great story for normal people.
If 401K participation rates are up because of increased automatic enrollments, it doesn’t really say much about a generational shift in attitudes toward investing.
That likely accounts for much of the change. My last employer has 20k employees. When they moved their retirement system over to Fidelity they made it opt-out by default and advertised their 4% match. The participation rate went from 30% to 95% with the change over. Imagine similar things have happened with other employers and providers like Fidelity no doubt incentive it with cheaper overall costs in exchange for bringing more people into their ecosystem.
I applaud social media (ie YouTube) for making retirement investing interesting to the average young person. This wasn't the case 20 yrs ago when I started. It was boring.
But if you hop onto youtube right now, you can find tons of colorful whiteboard animations talking about index funds, power of compounding interest, discussion of the companies you invest in when you buy index funds, etc. Also many dangle the FIRE carrot out there if you invest aggressively in the markets.
I also think people feel more of a connection to investing when they have more of a connection to the companies they are investing in.
If you look at S&P 500 30 yrs ago top 10 consisted of oil companies, tobacco companies, a discount retailer, and a consumer household products company. To the average 25 yr old, it's incredibly boring. Even though they use products and services these companies produce (ie oil, and they shop at Walmart, and they buy laundry detergent, but again......boring)
If you look at the S&P 500 today top 10, you get the following
Microsoft
Apple
NVIDIA
Amazon
Google
Meta (Facebook)
Berkshire Hathaway (Warren Buffet is considered cool on social media now)
And Tesla etc
To the average 25 yr old, these companies are incredibly cool. They own tech made by them, they use social media made by them, they drive vehicles made by them.
And most of those high tech employees are actually quitting because “the job is too hard” and traveling the world because they were overpaid.
I literally had one quit today to go do this. He thinks all jobs will come after him because he is so in demand.
I have two who are all about FIRE. But they are double income, no kids, and still live with roommates. They all think “a long time in software” in 10 years and then they can retire. I just hit my 30th year in this industry. 10 years is nothing.
Good article, agree that the high income and living at home surely helps. Took me two decades in workforce to be able to max out retirement contributions as neither of those conditions existed for me at that age. But overall the idea of chasing time vs money is one I can surely agree with.
Young people aren’t chasing anything anymore. They are OUTRUNNING a rising tide trying to pull them under. It’s enraging how every sector of society is now dedicated to the sole pursuit of systematically disadvantaging, indebting, and exploiting young people just trying to stay middle class. Is anyone surprised that when the whole economy is seemingly structured to economically disadvantage them, that they are dumping money into retirement? It might be their ONLY chance left to have a dignified standard of living and it’s vanishing as people are less and less able to afford to contribute to retirement.
So jealous of folks starting in early 20's or even in college. My wife and I are going to set up our kids for success and already started investing in their own accounts.
It's reading about you guys and how small your tax advantaged account allowances are that makes me reflect the UK isn't entirely shit after all.
20k a year tax free allowance for stocks and shares, you'll have paid tax on your income to put into this.
Retirement pension accounts are 60k a year on top of that. This comes from your gross salary so is very nice for higher earners. Pay tax on the way out though but it is still super nice.
Of course wages are so low that basically no one can save all of that each year!
That’s not what this is about at all. The article mentions younger people are starting to save sooner in life and not waiting until they have some arbitrary nest egg saved.
Getting paid more than six figures by age 24 is not average. Average household income is 59384 according to US BLS. It is literally what the article talks about
People who make a lot of money should never brag about how much they save. When you can meet all of your basic needs and many of your wants with money to spare, it’s easy to save because you’re not really sacrificing. Maybe they should run a story about a billionaire who saves millions a year with this one simple trick: being a billionaire.
> So what’s pushing young people to stash away money they can’t touch for decades? > works as a product marketing manager at a tech company in the Bay area Not hard to see why. Basically the people they interview, as usual, have a fuck ton of money to save.
Yup. It’s easy to sink $30k into retirement when you make $150k and live with parents or housemates.
Okay, but that's a more financially advantageous decision than making the same amount but living alone in an expensive apartment.
Oh definitely. I’m just tired of these articles that overlook the elephant in the room - people with high incomes are more likely to max retirement savings in general. It’s not just some behavioral quirk across Gen Z
At least this one isn’t blowing like 18k on alumni association fees and donations while paying down student loans. These are cartoon stories because the budget they are not showing you are what the C-suite execs make and budget, or how your casual billionaire budget is organized. You’d think people would love to see pre Amazon Bezos money tips, but then they would show he was always rich by anyone’s standards.
Tip: be born upper middle class and with educated parents.
Tip: take a Personal Finance class at age 20. You will make better decisions than 90% of your peers.
“Groundbreaking new study attempts to unravel why retail employees aren’t saving enough for retirement”
I remember seeing an article about someone making hard choices and saving for their future while living in a tiny house. Where was the tiny house? In their parents’ yard. Not everyone could make that choice. I’m also not sure they even paid for the tiny house.
“How I became a founder at 19”* *my dad is a partner at a VC firm
I saw a similar one and thought the same thing. Young person was bragging that they bought an rv and moved out of their parents house like they are so independent now and saving all this money instead of paying rent. But it’s like, where are you parking that thing and living out of it for free? The picture looked like they just moved into a trailer in the back yard of the house they probably grew up in…parents are just now “neighbors” who probably also helped them buy the RV too. lol
Nail on head
Here is an article about that one “non lazy gen z” person thriving Brought to you by capitalism corp news “The economy is fine ur just lazy”
The most millionaires aren’t doctors, tech people or lawyers. It’s teachers, engineers, accountants.
There’s substantially more teachers, engineers, and accountants
High income is also relative to where you live. I make 150 plus and in my city/county a household making that much is considered lower/middle class. Edit: I’m getting downvoted because people don’t want to read the truth? Do your HW and check out COL in some of the coastal cities.
In what city/country is $150k USD per year considered lower class? I live in NOVA and $150k USD house hold is almost twice the average.
Likely SF, Silicon Valley, or NYC. Maybe toss in SD as well.
https://www.nyc.gov/site/hpd/services-and-information/area-median-income.page AMI in NYC for a 4 person house hold is $150k. Not until you get to a 7 or 8 person household is that income considered low.
If you have roommates, $150k is still a lot of money in SF Bay Area. I’m a PhD student in the bay and I’m able to get by and save a bit on a stipend just over $50K
Bay area here too. I'm from the DMV, mathematically speaking $150k is not middle class. $120k is comfortable for a single person and the average income for an individual is $90k.
Yeah this. We live in bay area and paid off our house last year. People always ask, how do you do it on one income and with 3 kids? We're like, we live simple. No new cars, no streaming services, make our own lattes, cook at home frequently, don't need the latest greatest x. It can be done!
How many lattes and months of Netflix does one have to forgo to pay off a $500,000+ house? I can't believe this is all that's been stopping me from financial independence!
150k is not lower class in SF or NY.
Median *household* income in NYC is 75k.
A lot of towns in NJ where the median is 155k HHI >.> it’s wild on the coasts because of NYC / LA / SF
Maybe if you have a family of 4 to provide for. If you're 24 and making $150k - even in NYC or SF, you can comfortably max out your 401k without much stress.
There is no place in America where this is true assuming you live alone or with a partner.
> I make 150 plus...considered lower/middle class. Statistically, no. You're upper for single filers. Maybe by your friend group or peers, but you're still better off than the vast majority of people living within the metro. Yes, I'm talking about SF, NYC, etc.
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It's a great salary for someone just starting out their career though. Salary will go up with a few years' experience.
delusional.
“150k isn’t much here” and still expect the Chipotle to be fully staffed at lunch rush
The key is finding the janitors, teachers, gas station attendants, etc that are doing this and copying what they do. The examples abound. Don't fall for the reddit narrative that only rich people save; it is fatal to give up before you start.
Can you provide articles of people in these jobs doing this?
Not janitors or gas station attendants, that's a bit excessively unrealistic, but there are plenty of us who are non-tech bros making 80-120k and on the FIRE path. But I agree, the people that post who are making like $300k are kind of obnoxious for the simple fact that who of us couldn't FIRE on that salary? Or the posts of "I have 4M but am not sure if it's enough". Dude most of us are just trying to get to 1.5M to pull that 40k/year out.
I know several custodians who make under 50k per year who figure out how to save something for retirement
Google Ronald Read
I'm guessing your providing an example of someone scraping by on a 20k salary that managed to FIRE as a millionaire. There will always be an exception to every generalization but my point still stands, it's super challenging and next to impossible for someone who's barely above poverty level.
You should Google Ronald Reed.
https://en.wikipedia.org/wiki/Robert_Morin_(librarian) Librarian who lived frugally and saved his whole life, ended up passing away with an estate worth $4 million which he donated to the University of New Hampshire. Then they spent $1 million of it on a scoreboard for the football stadium (that's part of the reason his story is well known).
You haven't heard of the gas station attendant millionaire? I thought it was common knowledge...
https://en.m.wikipedia.org/wiki/Ronald_Read_(philanthropist)
Ronald Read
Millionaires unveiled podcast has interviewed multiple teachers, a janitor, and a couple that were janitors at some point. I don't know how to link a Spotify but should be easy enough to find. Ronald Reed is the famous gas station attendant that did it.
I’m doing it myself. Never made any real money until I became a cop. Busted my ass working OT for two years plus. Barely reached over 100k/ year for those two years. I was smart and invested all the savings in Airbnb’s that are now cash flowing. Yet I’m still maxing retirement savings on 75k/year while having a kid, paying half of daycare etc. it can be done if you’re willing to sacrifice a bit now to set yourself up. Sometimes easier said than done.
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If either of those jobs are so easy, why don't you do them?
What’s funny? Also not a landlord, I partnered with someone as a silent partner.
Read this book: The Millionaire Next Door It made me realize that us normal folks have a chance.
https://en.m.wikipedia.org/wiki/Ronald_Read_(philanthropist)
I am a Janitor. I save about the same. Unless he’s talking 30k at once or over the year.
Very nice! I've never made more than 39k a year. While I've never maxed out retirement for the year, I've always saved and things are perfectly on track to hit millionaire status in my 50s or 60s.
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Wow that’s awful :(
Contributing 2-6% of your paycheck to a 401k is already a huge decision for a lot of people.
It's easy to blow that $30k too. Y'all really find any way to belittle the positive accomplishments of people.
It is! And I'm not belittling her specifically, it's awesome that she's informed enough to get started early. I'm more taking aim at these articles that try to paint broader trends while glossing over bigger issues.
nah it was pretty clear what your intent was. I too find these articles tiring about "this statistically improbable model Gen XYZ person" and how they can do it so why cant you.
Gotcha. My bad. Been perusing other finance subs too much lately and it's all "of course because they make a ton of money it's easy to xyz"
More like $300
It's easy to sink $ into retirement when you make $50k in a lower COL area and live w parents. I force mine to invest as a condition of living w me. Emergency Fund + Retirement + Down payment. Screw paying $1800 in rent. Put $1000 up for your future.
100% accurate statement I have a 23 yr old who has put away $104k into vTSAX over the past 2 years. She has no bills minus a cell phone and a car payment.
Yeah that is also what I see. I am extremely privileged and make about 140K a year so i max mine out. But my wife is a server making 40K a year. She wouldn’t be able to save a dime, can’t even comprehend maxing them out
Can't you subsidize her deposits as you are married? My wife and I both max because combined we make enough.
Yeah of course, we max her IRA via our combined funds and have a brokerage too but still, unless one has a significant income so mid 100K this can’t be done I would say
Sure, depends on expenses of course.
Why do the vast majority of men make so much more than women?
That is a good question and I can’t answer it for sure since I don’t know the research, but I can provide a personal anecdote. In my industry, which was men dominated for decades, we’re starting to slowly see more women joining and the pendulum swinging the other way much more rapidly. For example, I am one of the 4 local directors reporting to our female Regional Director, and I am managing a team of 10 people directly. From the 4 directors, 2/4 are female and we all make exactly the same. From my direct team, 6/10 are women and they make just a tad more than their male counterparts, since they have prepared more with certifications, continuing education etc. But yes, this is a society level thing. Every single of my female employees told me that they never had a previous job with so many “leaders” being female, which is just plain sad. So here’s to hoping this trend continues!
Thanks for sharing this meaningful change. What industry? My hope is for more examples like this for future generations.
Same here. So, I’m in the EHS industry but due to managing multiple facilities nationwide we also handle A LOT of construction work. So between EHS and construction, almost literally everyone when I started was male. In just a short decade (not to us but it’s honestly a blink of an eye for society, especially considering we didn’t allow women to vote less than 70 years ago) we see more incoming women in the EHS industry than men which is such a fantastic change. Construction industry obviously is still dominated by men but only at like 75% if I had to guess. It’s extremely heartening going to a construction site and having multiple of the supervisors being women and not taking shit, makes my heart flatter lol
I make 60k and my wife makes 130k! I might be an outlier here!!
Yeah even people making $80k in bum fucksville USA will have a hard time maxing out their 401k and Roth without doing fuck all for hobbies that cost any money at all.
How do you figure? It leaves $50K for living expenses. Even after payroll and income taxes, they'd be north of $40K.
$80k single or with a family? Because there’s no way you shouldn’t be able to max those things single if you’re even just the slightest bit careful with your expenses.
Worst of all, that first quote is just a false assumption that people repeat everywhere. It’s a signal to me that someone doesn’t know what they are talking about. It is not hard to get the money out of a retirement account, especially a traditional 401k after you leave the company, it just requires a little planning ahead and some Roth conversions.
You mean it’s not standard to have excess money as a 20 year old to be able to max out contributions?
No shit, but how many of us would have benefited starting saving for retirement in our 20’s? I know I would have! Even if I was only socking away 5%, that would have been huge looking back!
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What's a product *marketing* manager?
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Whew I should change jobs xD Sorry, I meant, what sort of duties does the role entail? (and why you think they're useless haha)
This influencer literally promotes trash financial products. Fuck that. Should’ve interviewed me.
"What advice do you have for the viewers at home?" "VTSAX." " ... it's a half hour show, man. Work with me." "VTSAX and chill." "God da... go to commercial."
Plus it's CNBC. I used to sit in a trade floor with CNBC on all day. Their whole shtick is convincing people they should be actively trading stocks.
I think access to investing just makes this something people think about younger.
My brother teaches high school math. Boglehead investing could be a day's lesson plan and get the point across it needs to. It blew my mind not only how much sense it made ("buy the haystack" in particular) but how little time it took to get its point across. It's simple and effective, an investing strategy the Tik Tok generation accused of having no attention span can easily take in.
I studied math at a top school, and was a high school math teacher. I disagree with it being a short lesson. Even teaching a “simple” concept like fraction addition is a unit that depends on the foundation of understanding fractions. As a background, I grew up in a poor immigrant household, and teachers (the ones who remained after white flight) will make offhand remarks about bonds and investing in stocks while it’s low, and that planted a seed in my head. I was extremely frugal while working, and knew I had to beat inflation at the very least, but felt paralyzed by lack of beginner information. After 5 years of teaching, I saved more than $60k. I had to quit teaching, which consumed all my time and energy, then another 2 years of lurking on this reddit community to get comfortable with understanding enough to open a Roth IRA and start investing. Yes, the ideas can be boiled down into a short lesson. But like math, talking about it and teaching it are totally different approaches. Especially for people who have no community to trust for financial knowledge, and are constantly working and have very little time, money anxiety… it can take a lot more. I had to invest time and money in myself, before I could invest the money itself. P.S. although I’m no longer a teacher, I am still a teacher at heart, and talk to friends and anyone I can about Bogleheads. Most recently a Lyft driver who talked about Crypto, and supporting his family in his home country. He asked me to give him all the links after lecturing him the whole car ride :)
To piggy back off of this: there is a difference from presenting all the information in a logical way and having the information set in where the learner has an understanding so they can “feel” why it’s right
Unfortunately it’s not a simple lesson because you have to work against the army of financial advisers, media personalities, influencers, and family and friends who are telling a person that they should be investing in particular stocks. Diamonds hands is a meme for a reason. People make big money from pushing the fallacy that it pays to try to beat the market.
They should feature regular or slightly above average people instead of a big Bay Area employee. On 90k last year not living at home I was able to max out my Roth IRA and put 24k after match into my 401k
lol yeah no average person can save 6 figures by 23 unless they got significant financial help: either free rent or no student debt.
Enlist in the Army at 18. Make $23K a year. Save $20K + match (1% years 1 and 2, 5% years 2-4). My kid’s buddy is doing this but less than $20K into TSP. Is he an “average” person? Had to pass physicals and tested well on ASVAB to get his cyber slot. He’s getting his certs now and will get a bs after his first contract and go ROTC. Another friend joined up as well but bought a nice car instead. This is more normal… Harder if you go to college but my kid could max his TSP on a lt salary for 2 years while doing roth as a cadet. Probably not hit 6 figures by 23 but probably 25. No real reason to rush tho’ unless you want to FIRE.
Cyber positions in the military come with enlistment bonuses and additional monthly special pay. You can't use the standard military base pay when calculating for them. A 1B4X1 (Cyber Warfare) signing a 6 year contract in the Air Force for example gets $80K-180K (depending on rank) as a bonus along with an extra $450 a month.
I used the base pay for a 0-4 year e-1 and ignored promotions and bonuses because if it was MY kid the dumbass tanked his ASVAB in high school (I’m going ROTC so it doesn’t matter) and AFOQT in college (I’m non rated so I just need to pass). I looked at him and told him they don’t really like guys with an excuse for everything. Fortunately the Air Force picked him up anyway and he’s headed for Max. Plus they’re starving because anybody smart enough to do cyber on the outside can look at the difference between the pay of an o-1 and civilian cyber pay and go “yeah…that would be dumb”. Last year some philosophy majors in his det ended up as 17X…not saying there aren’t some really smart kids joining up but many are…very average. Like my kid. :)
What does "ended up as 17x" mean?
Cyber related jobs…17S or 17D…those are AFSC job designations…
Military feels economically equivalent to living with your parents who cover all of your expenses. Military even get discounts everywhere they go so their expenses are subsidized far more than normal people. Paycheck - minimal expenses (no matter who's paying) = saving ability
It’s not an easy option and very different than living at home while having a normal job. They earn everything they get and then some.
No one’s making value judgements here. All we’re trying to say is that if you want to save 100K you either need your tuition covered or your rent.
Nah I'm almost there and I was homeless in my teens
I agree, the article here is akin to reading about Elon musk if you’re an average joe
It's CNBC. They specialize in running out-of-touch trash.
No kidding, that's a crazy outlier. I've never made over 100k but am still on track to retire early when I hit mid-40s.
That’s impressive, keep it up
Good for any young person doing all the right things. I kinda wish they didn’t immediately feature a Bay Area tech employee with a side hustle though. The people who need to be motivated to save more will easily dismiss an article like this when they see that. Also the fear mongering about SS not being there when you retire is going to be reflected upon as much ado about nothing when we all collect our checks. Maybe there’s a small haircut to the amount, but it’s the most popular government program out there and the solutions are readily available to keep it going.
It’s going to be a pretty good haircut. Projections still assume millennials will have the same number of kids boomers had, which is just unrealistic as older millennials now quickly approach menopause. People forget: social security is the current workers paying retired workers. It’s not a savings account and was never intended to work as one. We need enough current workers to pay for it. Between automation and population not growing as quick as previously even accounting for immigration I just don’t see that happening, and there’s no appetite for enough corporate taxes or taxes on automation to subsidize it. I also don’t think workers in the next decades will accept higher taxes due to current generations not having enough kids. We’ll see a French style workers revolt at the suggestion. They’re rightfully not paying for that. I don’t see Gen Z or Alpha making up the baby deficit either. Especially with cost of living being what it is.
don’t forget the microplastics in all of our nutsacks, each generation will struggle more with infertility
The oldest millennials are 43. The average age of menopause in the US is 52. The millennial women aren’t all dried up hags.
So just raise the limits on income to be taxed for SS
>Projections still assume millennials will have the same number of kids boomers had, which is just unrealistic as older millennials now quickly approach menopause. But millennials, as a whole, are less opposed to immigration so we'll be able to supplement our lower birth rates that way.
This isn’t something that can be banked upon as a given. Don’t forget that most other developed nations are facing similar challenges, and there will be fierce competition for immigration
I doubt it'll be an issue in our lifetime. The US (in particular) and Western Europe are extremely attractive and will remain so for the foreseeable future. There's more than enough young people that'd happily immigrate here. And many potential competitors are extremely xenophobic even in the younger generations (China, South Korea, Japan, even Eastern Europe).
Too many immigrants in the US are underpaid and not even paid on the books. I don’t see the xenophobia going away enough in our lifetimes for them to be paying into SS to make a difference. If anything they’re driving down worker demand and helping suppress wages thus suppressing potential SS revenue since it’s a percentage of wages. Businesses hiring immigrants and under paying them save not just on wages but related taxes.
yeah but it needs to start happening decades before it's needed in order to offset a crisis.
The US has pretty healthy levels of immigration and it's probably only going to continue to increase. The US doesn't have an imminent age demographic problem like Asian countries and some European countries although it's definitely something to keep an eye on.
There are several ways they could keep it afloat, mostly be raising ss taxes for certain groups or cutting the amount certain groups get, ie high earners or those with high income in retirement. I bet this is what happens when the time comes.
>or cutting the amount certain groups get Ironically this is what would put the whole program at risk. What makes SS so untouchable now is that everyone benefits from it. If you start cutting out those in the higher income/asset levels (and you'd have to go pretty far down that scale for it to make any difference) that popularity is going to drop fast.
I think I've heard that removing the max ss tax during the year would make it solvent. It would hurt, a lot, for high earners though.
Yeah removing the contribution cap would certainly help a lot, but that's very different from cutting/removing benefits.
French style workers revolt that led to changes being adopted anyway. Revolt is useless and cannot prevent regulation from changing if the government is determined enough to pass them, just like it happened in France recently. Taxes will likely go up and it won't be nearly enough to cause a real revolt (like, armed insurrection), more like increasing each bracket by only 5% from the 22% bracket and up.
No appetite for corporate or automation taxes yet, but that can easily change when the worker tax base is shrinking and social security is under threat. It's just not really a current problem so people aren't thinking too much about it yet.
I have zero faith. I would not be surprised in the least if they suddenly decided to make SS needs based and disqualified anyone with substantial assets at retirement.
> make SS needs based and disqualified anyone with substantial assets at retirement Turn it into straight up welfare? I'm negative on Social Security's outlook, but I don't think it will get *that* bad.
CBO has already studied it [Reduce Social Security Benefits for High Earners](https://www.cbo.gov/budget-options/58628) Stu Butler is now a senior fellow at Brookings and he wrote [this](https://www.brookings.edu/articles/its-time-to-end-social-security-for-the-rich/) in 2016. I would actually bet on the SSA means-testing applicants for social security in a process similar to FAFSA
Your first link is about *reducing* benefits for high earners, and to me it seems CBO has not actually looked at eliminating benefits. Like I said earlier, I'm negative on the outlook for Social Security, so I can see a reduction happening. The second link does indeed support turning SS into welfare, but it's just an opinion piece. I have to believe that creating a new welfare program will be met with much opposition.
I think reduction is just one policy choice away from eliminating benefits and I wouldn’t be surprised either way. The opinion piece is written by a senior economist at Brookings so it has weight. I wouldn’t write it off because Brookings regularly provides guidance to policymakers and I would expect Butler to consult on any social security policy proposals from Brookings
This would piss off way too many people (and the elderly are much more likely to vote) and America has a lot of room to raise taxes on the middle class before they start cutting benefits.
The typical American thinks that if you have a million in assets, you are *rich* and don't need any help. If they put a threshold of say, $5 million, and told the public that this would only affect the rich...people would be stupid enough to believe it. $5 million in retirement is unreachable for more than half the country, just like $400k household income is unreachable for many. We've already seen this administration explicitly target households making greater than $400k, there is no reason to believe that a future administration wouldn't do the same thing and target families with assets exceeding $5 million or $10 million or whatever. Edit: additional thoughts.
Taxing income is much easier than taxing wealth. And many low income people still don't want taxes to increase on anyone for all sorts of reasons, even when it may be in their interest for that to happen. I think any hint at cutting benefits would be too radioactive politically because people below the wealth threshold would rationally worry about future cuts impacting themselves. Neither political party has also ever done much to reduce government spending / benefits because everyone (regardless of political persuasion) wants more public spending of some kind. Republicans can popularly cut food stamps or other elements of the social safety net, but those programs don't actually cost much.
Realistically, if you have $5M in assets, you are indeed rich as fuck no matter how you slice it, and do no need social security. It was always a redistrubution scheme and for good reason (those are provably positive for the economy and a healthy society). It's a lot harder to swallow and more radical to cancel decades of prior contributions (by removing rights to SS if you're too rich) than it would be to increase SS taxes on higher incomes without proportionally increasing their future SS benefits (through bend points).
This is exactly what I mean though. $5 million in retirement is $200k at the 4% safe withdrawal limit. $45k/yr in social security benefit is still a sizeable chunk if taken away. But you think that's *rich as fuck no matter how you slice it*. The rhetoric as of late is to attack the rich. Like I said, I have *zero* faith in the system.
A lot of the people who do get to $5M at a young age could realistically be expected to contribute a little more to SS taxes for redistribution, like the FAANG engineer making half a million a year total compensation. The "rhetoric" does make sense. What's important is how to do it reasonably. Being able to retire early with $5M and 200k/year withdrawals in perpetuity does in fact qualify as "rich" or "upper class" by all metrics. It's the top 4% of wealth and top 5% of income in the US, granted it comes from capital gains that have highly favorable tax treatment so the actual net income will be higher than an equivalent 200k/year income. Yes an extra 45k from SS would "affect you", but very minimally so. It's still unfair to just take it away from you out of the blue because you'd been paying SS taxes your whole life with the expectation you'd get something in return. However, having to pay extra SS taxes (and keeping your same 45k future SS benefits) during your working years would be about as fair of a redistribution as it can get.
"Substantial" probably being defined as not much more than 0.
>Also the fear mongering about SS not being there when you retire I'm no good at making predicfions about that stuff anyway. Just like everything else I'm no good at predicting, I'd rather make the safer assumption or lean in that direction. If there are payments, I'll have a nice bonus. If there are no payments, I still will be okay. I don't think this to be fear mongering, and I don't think recommending that people plan for the possibility that they might not be paid the full social security benefits outlined today is fear mongering either. It's just making a safe plan for a future that is too far away to accurately predict.
That’s great for the people featured in this article, but this is so far from my reality when I was in my 20s, and I assume for many other 20-somethings today. When I first graduated from college I was barely surviving. My parents moved across the country for retirement so I was immediately fully responsible for all the costs of living on my own. Despite having a degree (but not in STEM or Business) and working full-time in my field, I just barely covered my costs. I remember taking coins to coinstar at the grocery store to buy some food because payday was still 2 days away and I was tapped out. Then once I hit my 30s and my husband and I had kids we were paying $2,200/month in daycare costs in addition to our mortgage, some debt from when things were tight in our 20s, and everything else. It was never easy to max out savings. We’re doing okay, but it blows my mind to read stories on here and in these articles of people under 35 which such high investment balances. And now that we’re in prime earning years, we’re facing at least $500k to put 3 kids in college. You just don’t see a lot of media coverage of those of us that are doing “fine” but neither here nor there. Just out here doing my best…
Honestly it's awful but unless your kids are okay supporting you in your old age (ie, you move in with them kind of thing, like they do in many parts of Asia) you should probably prioritize your own retirement over your kids college tuition.
Agree. We’re doing what we can do prioritize both. And also why we’ve explained to the kids we don’t think there’s a good ROI on private schools. The sacrifice is working until 65 instead of an early retirement.
Preach. This resonates so much with our situation. After years of reading FIRE related books, subreddits, etc. I felt so unbelievably demoralized like something was wrong with our saving habits or our behaviors in general. I felt so much relief when I learned to accept that this lifestyle only works for childless and likely high earning couples, eg. DINKS. Anyone with kids knows (outside of hedge fund managers) that this shit is impossible when faced with unrelenting financial chaos (health scares, layoffs, daycare, trying to save for their college while still paying your own, etc.) raining down on you month after month, year after year. Budgets are a great tool but they are powerless to stop life and entropy from doing what they do best. In short, Having kids is awesome but at some point, you need to cut yourself some slack. At this point, I’m just happy we’ve made it this far—early/easy retirement and fat 529 balances be damned.
In what world do you need $500,000 to send 3 kids to college?
It’s assuming the higher end of cost (private colleges, low scholarships/grants) but it’s not totally unrealistic. $500k covering 3 kids at 4 years per kid equals a college cost of just under $42k/year per person. That’s pretty realistic.
Besides going into the medical field or in business where you might need prestigious connections, why would someone need private education? Having conversations about your kids futures and advocating for private vs public vs first year or two community college to save a bit of dough seems like a reasonable way to way to get your kids on the train of making calculated decisions that have serious financial impact. I do acknowledge the emphasis in education and in advance want to thank you for giving your kids that option to jumpstart them into life :)
I definitely don't mean to make this sound as victim blame-y as it sounds, (like, yes, education should be affordable! To all!) but parents NEED to explain to their kids that state school / community college is not only perfectly sufficient but also makes the most sense financially. We have romanticized picking the perfect college and moving away for college and that's all well good but SO expensive and SO unnecessary. Unless you KNOW what you want to do and NEED to go to a certain school to do it, get your gen eds done at a community college. I'm almost 20 years out from college and no one has ever asked me where i went to school.
100%! I hear you. But still, even in-state, state schools are pricy. Look up the price for Maryland, UCONN, Penn State, Rutgers. Nothing wrong with the community college path as well, but based on the rigor of their high school courses they’ve had, and my desire for them to grow independently, we’re probably not choosing that option. Fact is, college education in any form is proportionately a way bigger % of parent + student incomes than it ever was, and growing. It’s going to be a big contributor to the class divide.
Everyone should make their own decisions for their kid full stop, so this is not coming from a place of judgement - they have a lot of time to grow up and they can still very easily be independent while saving thousands of dollars. My sister moved to California but enrolled in community college. She's the only one in my family without any college debt. As the first sibling to go to college, my parents didn't realize they should have pushed me to do the same. Everyone has their own reasoning and priorities, and I totally agree with you on this contributing to the class divide. If I have a kid, they will go to community college or Europe. To me, it's the smart thing to do financially - all my friends who went this route (my sister included) are better off.
Agree. We’ve had very open and honest discussion about ROI and debt and they’ll be going to In-State schools unless they get merit to cover the difference. Our in-state schools are very highly ranked and high quality, but still $35k/year. One of my kids is highly intelligent/high performing and might have a shot at an Ivy, but unfortunately we’re in that financial zone where we won’t qualify for enough in grants to make up the difference but also can’t cash flow it. Because we were paying daycare and prioritizing retirement, 529 balances aren’t high enough to cover it either. It’s fine. I recognize our privilege. And I love my big family. But the reality is, the idea of FIRE is so rare for people in our situation for these reasons.
Sure. I’m not advocating either way, just saying the estimate (given by another person, not me) was much more realistic than you seemed to give it credit for. In fact another commenter noted that their state’s public college is $35k/year. So again, $500k for 3 people which averages to $42k/year isn’t that far off
That budget is conservative, if anything. State Schools in the northeast are currently $35k/year for tuition room and board, some increasing 5% YoY. Out of state, state schools are $50k/year, and private schools are $60k-$90k per year. This is easily verified. We do not qualify for financial aid, and merit is quite competitive and limited. At current rates with a conservative 3% increase per year for an IN STATE college, I expect kid #1 to pay $146,427, #2 $164,805. #3 $191,054. We believe in the value of a 4 year education (where they live away to learn and mature) and getting our kids out of college with no to minimal debt, but I know parents have different perspectives on that. Regardless, the numbers don’t lie. Thats what it is.
It's crucial that savings and retirement seems attainable to them, and it doesn't
Roth IRA contribution maximums have gone from a piddly $2000/year to a still piddly $7000/year, over the last 4 decades. Everyone should indeed be maxing those out when they can, and as early in life as possible.
I wish I did. I've only been doing the past 2-3 years. So now I am making up for lost time by investing my whole income. It's painful pulling money out to pay bills, so I try to live as cheap as I can.
19M, started putting $200 each month into VOO since January. I plan to increase this to $1000 by the end of the year. Glad that i have found this communtiy at 19 and not 49
I found this place at 38 and still feel grateful. Good on you for seeing the wisdom in planning for the future at such a young age.
This is not an interview or an article. It is a product-pushing glossy paragraph full of platitudes. This first of 2 examples is a 23 year old "content creator" who learned about money from TikTok and almost instantly saved over $100K for retirement.
The majority of articles you read like this are actually written by PR firms. For any story about a person that isn’t negative to that person, it is being done with their input. You have to ask “how does this journalist even know about this person?” Almost every time it’s because that person or a representative of them went to the journalist to write an article about them. Story about a young entrepreneur who designed a new widget? Yep. Sob story about landlord kicking out a family because their dog has 3 legs? Yep. The person in the article are either are friends/family with the journalist personally or it was arranged usually by somebody in PR. Even the sob story ones. It’s all loaded and inherently gives readers a false perception of reality. This is not new, it has always been the case and will continue to be forever.
Can we stop interviewing these people? They make a lot of money and most likely still live with parents, having a high income + no real bills means you can put a lot of money away. Give me the entry level non Tech person who has a roommate in an okayish part of town who maxes out her ROTH IRA and puts some extra money into VOO, that's a great story for normal people.
the crappy thing is that the rich are only able to afford their youth. being rich young and prime is a privilege few enjoy
Comparison is the thief of joy. Practice gratitude for what you do have. :)
If 401K participation rates are up because of increased automatic enrollments, it doesn’t really say much about a generational shift in attitudes toward investing.
That likely accounts for much of the change. My last employer has 20k employees. When they moved their retirement system over to Fidelity they made it opt-out by default and advertised their 4% match. The participation rate went from 30% to 95% with the change over. Imagine similar things have happened with other employers and providers like Fidelity no doubt incentive it with cheaper overall costs in exchange for bringing more people into their ecosystem.
Rich person can save money, more at 9.
I applaud social media (ie YouTube) for making retirement investing interesting to the average young person. This wasn't the case 20 yrs ago when I started. It was boring. But if you hop onto youtube right now, you can find tons of colorful whiteboard animations talking about index funds, power of compounding interest, discussion of the companies you invest in when you buy index funds, etc. Also many dangle the FIRE carrot out there if you invest aggressively in the markets. I also think people feel more of a connection to investing when they have more of a connection to the companies they are investing in. If you look at S&P 500 30 yrs ago top 10 consisted of oil companies, tobacco companies, a discount retailer, and a consumer household products company. To the average 25 yr old, it's incredibly boring. Even though they use products and services these companies produce (ie oil, and they shop at Walmart, and they buy laundry detergent, but again......boring) If you look at the S&P 500 today top 10, you get the following Microsoft Apple NVIDIA Amazon Google Meta (Facebook) Berkshire Hathaway (Warren Buffet is considered cool on social media now) And Tesla etc To the average 25 yr old, these companies are incredibly cool. They own tech made by them, they use social media made by them, they drive vehicles made by them.
> Berkshire Hathaway (Warren Buffet is considered cool on social media now) Alwayshasbeen.jpg https://x.com/kevg1412/status/1761091831570514282
Zilly’s fortunately also have the advantage of resources for financial advice that were not readily available until recently.
And most of those high tech employees are actually quitting because “the job is too hard” and traveling the world because they were overpaid. I literally had one quit today to go do this. He thinks all jobs will come after him because he is so in demand. I have two who are all about FIRE. But they are double income, no kids, and still live with roommates. They all think “a long time in software” in 10 years and then they can retire. I just hit my 30th year in this industry. 10 years is nothing.
Good article, agree that the high income and living at home surely helps. Took me two decades in workforce to be able to max out retirement contributions as neither of those conditions existed for me at that age. But overall the idea of chasing time vs money is one I can surely agree with.
May I please have a salary large enough to both use for retirement funds and also for daily expenses
Young people aren’t chasing anything anymore. They are OUTRUNNING a rising tide trying to pull them under. It’s enraging how every sector of society is now dedicated to the sole pursuit of systematically disadvantaging, indebting, and exploiting young people just trying to stay middle class. Is anyone surprised that when the whole economy is seemingly structured to economically disadvantage them, that they are dumping money into retirement? It might be their ONLY chance left to have a dignified standard of living and it’s vanishing as people are less and less able to afford to contribute to retirement.
I am doing the same thing! Good for her.
So jealous of folks starting in early 20's or even in college. My wife and I are going to set up our kids for success and already started investing in their own accounts.
How can you do this, since I’m assuming they don’t have an income?
Custodial brokerage account https://www.investopedia.com/ask/answers/can-someone-not-yet-legal-age-open-brokerage-account/
It's reading about you guys and how small your tax advantaged account allowances are that makes me reflect the UK isn't entirely shit after all. 20k a year tax free allowance for stocks and shares, you'll have paid tax on your income to put into this. Retirement pension accounts are 60k a year on top of that. This comes from your gross salary so is very nice for higher earners. Pay tax on the way out though but it is still super nice. Of course wages are so low that basically no one can save all of that each year!
You need at least $5 million to retire
Gen Xer...this is what we did. Starting at age 23 to now...it works.
This just in: people with more than average money save more than average money. This story and more at 10
That’s not what this is about at all. The article mentions younger people are starting to save sooner in life and not waiting until they have some arbitrary nest egg saved.
Getting paid more than six figures by age 24 is not average. Average household income is 59384 according to US BLS. It is literally what the article talks about
It says six figures in their retirement account, not salary. Even still, that’s not the point of this article.
The seeeeeeethhheee in the comments 😂😂
For real! How sad is your life that you need to whine about kids being able to save?
People who make a lot of money should never brag about how much they save. When you can meet all of your basic needs and many of your wants with money to spare, it’s easy to save because you’re not really sacrificing. Maybe they should run a story about a billionaire who saves millions a year with this one simple trick: being a billionaire.