You keep saying that, but you don't explain why 35% chance at a pension in the private sector in 1995 counts for you as universal access when the current 13% chance doesn't. I think you're whitewashing the past to contrast with the present, even though the situation doesn't need exaggerating.UADM wrote:Anyone who wished to work with a pension could have pursued it. Nowadays, outside of a small group, you cannot.
Savings rate of -2% for those under 35 - WSJ
Re: Savings rate of -2% for those under 35 - WSJ
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Re: Savings rate of -2% for those under 35 - WSJ
I knew a guy who lived in his car at a truck stop for a short time. It was a very dangerous way to live, even for a man. I wouldn't do it as a woman or with a family. Same thing with sleeping in camp sites. The high to day is 32 degrees F. Difficult to be productive at work when you spent the night freezing your buns off.chuppi wrote: Easier said then done but if my earnings was too low and if I felt that I couldn't get the ends meet, I would sleep in my car, bathe in the gym, sleep in camp sites or something until I figured a way out of it.
An elephant for a dime is only a good deal if you need an elephant and have a dime.
Re: Savings rate of -2% for those under 35 - WSJ
if 35% of jobs have pensions, you have to work for three different companies to get one pension--on average. If 13% of jobs have pensions, you have to work for eight companies to get a pension--again, on average. The former is more likely. However, the most important question is not the availability of a pension but it's size.fposte wrote:You keep saying that, but you don't explain why 35% chance at a pension in the private sector in 1995 counts for you as universal access when the current 13% chance doesn't. I think you're whitewashing the past to contrast with the present, even though the situation doesn't need exaggerating.UADM wrote:Anyone who wished to work with a pension could have pursued it. Nowadays, outside of a small group, you cannot.
Victoria
Last edited by VictoriaF on Tue Nov 11, 2014 11:55 am, edited 1 time in total.
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Re: Savings rate of -2% for those under 35 - WSJ
It is true that the US is not the only country with no formal financial education. However the US has insane college tuition costs. Look at Canada's tuition costs for a good comparison.Imbros wrote:US is not the only country with no formal financial education.
Maybe Baby Boomers did not like to make sacrifices either, but it looks like they really did not have to. They happened to be living in a rapidly growing economy where unemployment almost did not exist and wages were inflated.
So today's Millennial shouldn't make any sacrifices either because Baby Boomers did not have to back in the days?
The US is adopting to the new world reality. That's what I believe. Europe did go through this in 90s, and young adults eventually learned how to adopt to new economy where low wages and relatively expensive housing is the norm.
They downsized. When downsizing is not an issue in your culture, that is an easy thing to do.
Also, as far as I know, US home affordability is still better than most Europe and many developing markets. Yes, again, maybe Baby Boomers had it better. So what are we going to do about it?!
Boomers not only had it better, but their policies are what have driven us to where we are now.
What can people do it about it? Lots of things. They still will have a much harder time than previous generations and that was my point.
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Re: Savings rate of -2% for those under 35 - WSJ
I have a pension (private sector) as did my DH (also private sector). We are both 35. One thing I will point out about DH's job (and many of you have heard me complain about this before, sorry)... he may have had a pension, but his employer felt that a 401k or similar was not necessary because of the pension. It really limited our retirement savings. His pension is underfunded (currently around 70%), and I would much rather have that money in an IRA or 401k.fposte wrote:You keep saying that, but you don't explain why 35% chance at a pension in the private sector in 1995 counts for you as universal access when the current 13% chance doesn't. I think you're whitewashing the past to contrast with the present, even though the situation doesn't need exaggerating.UADM wrote:Anyone who wished to work with a pension could have pursued it. Nowadays, outside of a small group, you cannot.
My parents are late boomers. They had NEITHER pensions nor 401k for most of their careers. Luckily they opened their own IRAs and funded them, but we all know that IRA limits leave a lot to be desired.
Today, at least the 401k is getting more play. It's probably much more prevalent than the 38% peak prevalence that pensions hit in their prime. Cheers to what most of us DO have
An elephant for a dime is only a good deal if you need an elephant and have a dime.
Re: Savings rate of -2% for those under 35 - WSJ
One thing that the chart shows, which I find surprising, is that the savings rate for all three groups is much higher now than it was in the pre-recession boom years (2004-2008). It makes me wonder if the definition of "savings" is excluding investment in the stock market.
Re: Savings rate of -2% for those under 35 - WSJ
Its not as good as a pension but many companies nowadays match a percentage. Mine automatically enrolls new employees in a 401K. They also provide good tools and give us seminars. I'm a Boomer but my parents grew up in the Depression and they saved and saved and saved. It was difficult for them to spend money. Maybe something happened inter-generationally? I stayed with jobs I did not love because of the pensions. I'm very grateful today for my pensions.
Re: Savings rate of -2% for those under 35 - WSJ
I never said it was universal access and I already explained what I said. I said that the opportunity was there and a much large percent had access to it. It was 38% back then, which was 3x the amount as now, which is a much larger amount. Not only that, but the pensions now PALE in comparison to what they used to be in the 90s. Again, retire as a teacher from NYC schools and get 100k a year plus health insurance for the rest of your life. It is no where NEAR that now! So, not only is there MUCH less access to pensions, but the ones that are available are much, much worse.fposte wrote:You keep saying that, but you don't explain why 35% chance at a pension in the private sector in 1995 counts for you as universal access when the current 13% chance doesn't. I think you're whitewashing the past to contrast with the present, even though the situation doesn't need exaggerating.UADM wrote:Anyone who wished to work with a pension could have pursued it. Nowadays, outside of a small group, you cannot.
Re: Savings rate of -2% for those under 35 - WSJ
As you say, it is not as good. When a stock market collapse causes you to lose 40% of your retirement, those with a set pension sit pretty.Lynette wrote:Its not as good as a pension but many companies nowadays match a percentage. Mine automatically enrolls new employees in a 401K. They also provide good tools and give us seminars. I'm a Boomer but my parents grew up in the Depression and they saved and saved and saved. It was difficult for them to spend money. Maybe something happened inter-generationally? I stayed with jobs I did not love because of the pensions. I'm very grateful today for my pensions.
Re: Savings rate of -2% for those under 35 - WSJ
Again, the boglehead population is not the norm.
Many millenials on this site own homes, have six figure retirement accounts, six figure incomes, and no debt outside a mortgage. THIS IS NOT THE NORM!
I don't know how they calculated the saving rate thats stated but it seems in line with I'd expect. Starting out in life is tough, always has been. The quicker millenials can get on track by increasing their assets while simultaneously decreasing their liabilities, the better off they'll end up.
Many millenials on this site own homes, have six figure retirement accounts, six figure incomes, and no debt outside a mortgage. THIS IS NOT THE NORM!
I don't know how they calculated the saving rate thats stated but it seems in line with I'd expect. Starting out in life is tough, always has been. The quicker millenials can get on track by increasing their assets while simultaneously decreasing their liabilities, the better off they'll end up.
Re: Savings rate of -2% for those under 35 - WSJ
The fact that the study demonstrated a dramatic increase in savings during the recession, at a time when unemployment, particularly for the young, was nearly double that which it is now is very interesting.
It indicates to me, that the issue isn't that people are barely scraping by and unable to manage savings because they are merely surviving at a sustinence level. After all, how could they increase their savings during difficult economic times?
A more likely explanation is that people feel secure and it is easy to put off saving until "tomorrow." When "tomorrow" looks bleak, they feel compelled to save more.
Another alternative (though I'm not betting on it) is that the people surveyed were incredibly savvy investors, and saw the recession and the depressed stock prices as an excellent opportunity to goose their savings by pouring money into the stock market while the people who didn't participate in the survey were panicking. Having prefunded their retirement savings at an opportune time, they no longer need to make more contributions to their retirment savings accounts.
Guessing can be so much fun!
-K
It indicates to me, that the issue isn't that people are barely scraping by and unable to manage savings because they are merely surviving at a sustinence level. After all, how could they increase their savings during difficult economic times?
A more likely explanation is that people feel secure and it is easy to put off saving until "tomorrow." When "tomorrow" looks bleak, they feel compelled to save more.
Another alternative (though I'm not betting on it) is that the people surveyed were incredibly savvy investors, and saw the recession and the depressed stock prices as an excellent opportunity to goose their savings by pouring money into the stock market while the people who didn't participate in the survey were panicking. Having prefunded their retirement savings at an opportune time, they no longer need to make more contributions to their retirment savings accounts.
Guessing can be so much fun!
-K
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Re: Savings rate of -2% for those under 35 - WSJ
I have to think this study is excluding investment as well.
I'm a millennial, and from what I've seen of my friends my age, we all seem to be fairly frugal. I think part of the reason is that even those of us with good jobs (like myself) know a lot of folks who did everything right and are *still* having a hard time. It is eye opening to see smart, well educated people who find themselves searching over a year to land a job. As they say, 'There, but for the grace of God I go'.
I'm a millennial, and from what I've seen of my friends my age, we all seem to be fairly frugal. I think part of the reason is that even those of us with good jobs (like myself) know a lot of folks who did everything right and are *still* having a hard time. It is eye opening to see smart, well educated people who find themselves searching over a year to land a job. As they say, 'There, but for the grace of God I go'.
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Re: Savings rate of -2% for those under 35 - WSJ
I'm a millennial.
My parents never made much money but they were decent savers. That's about it though. Still no retirement fund or anything like that. I grew up really poor and it sucked. I don't want to be poor ever again so I save and invest, save and invest, save and invest.
My parents never made much money but they were decent savers. That's about it though. Still no retirement fund or anything like that. I grew up really poor and it sucked. I don't want to be poor ever again so I save and invest, save and invest, save and invest.
Re: Savings rate of -2% for those under 35 - WSJ
Please don't get caught up in generation vs. generation arguments.
Every generation has way more grasshoppers than ants.
It doesn't take a lot of financial education to learn that you need to live below your means.
In kindergarten, if you are given two marshmallows and eat them today, you don't have any marshmallows tomorrow.
Every generation has way more grasshoppers than ants.
It doesn't take a lot of financial education to learn that you need to live below your means.
In kindergarten, if you are given two marshmallows and eat them today, you don't have any marshmallows tomorrow.
Re: Savings rate of -2% for those under 35 - WSJ
which is precisely why they are so rare now, because the companies end up having to make up the difference.UADM wrote:As you say, it is not as good. When a stock market collapse causes you to lose 40% of your retirement, those with a set pension sit pretty.Lynette wrote:Its not as good as a pension but many companies nowadays match a percentage. Mine automatically enrolls new employees in a 401K. They also provide good tools and give us seminars. I'm a Boomer but my parents grew up in the Depression and they saved and saved and saved. It was difficult for them to spend money. Maybe something happened inter-generationally? I stayed with jobs I did not love because of the pensions. I'm very grateful today for my pensions.
Plus, they're harder to predict and account for than the sunk cost of a 401k matching contribution.
But yes - as an employee, pensions are much more secure - and they pay until death.
Definitely.fposte wrote:I think this is really the issue, not that twentysomethings today have a notably different amount of knowledge. They're graduating with more debt into an economy where they take longer to find a job and earn less at it. I'm not surprised they have trouble saving money in that situation.richard wrote:This is not good, especially when combined with increasing student loan debt.Americans who were under 35 in 1995—often labeled Generation X—earned wages that were 9% higher than today after adjusting for inflation.
There are also some interesting findings about the failure of financial literacy education--such classes don't seem to change behavior or stick with people very long after the end of the course, so the absence of such classes isn't likely to be part of the problem here.
The Economist posted an interesting graph recently, showing the % of GDP owned by the top 0.1% of earners vs the bottom 90%...for the first time since the 1930s, the top 0.1 is about to overtake the bottom 90.
http://www.economist.com/blogs/graphicd ... ly-chart-2
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Re: Savings rate of -2% for those under 35 - WSJ
I'm on the older edge of the millenials (32) and in a creative field. I don't have access to a 401(k) (to say nothing of a match!) or a pension and most of my peers are in the same boat. Either we are 'self-employed' or working at small companies that don't offer benefits. Even though I am now working for a much larger company (and finally have health insurance because of it!), there is still no 401(k). Yes, my job and my field are are a result of my choices, but I consider myself smart to have started thinking about retirement at age 24-- it wasn't at all on my radar at 16, 17, and 18, when I was deciding my career path. And yes, I am saving-- in IRAs and in a taxable account. But having a maximum $5500/year tax-advantaged savings rather than a maximum of $20,000+ is a huge disadvantage.
I don't know the statistics on who does and doesn't have access to 401(k)s but it's not only low-wage workers who are left out. I don't understand why that tax advantage can't be made available to everyone, regardless of their job.
I don't know the statistics on who does and doesn't have access to 401(k)s but it's not only low-wage workers who are left out. I don't understand why that tax advantage can't be made available to everyone, regardless of their job.
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Re: Savings rate of -2% for those under 35 - WSJ
There are even more staggering stats:
"The collective retirement savings gap among working households age 25-64 ranges from $6.8 to $14 trillion, depending on the financial measure. A large majority of households fall short of conservative retirement savings targets for their age and income based on working until age 67. Based on retirement account assets, 92 percent of working households do not meet targets. Under broader measures, most households still have insufficient assets: 90 percent fall short based on retirement account balances and estimated DB pension assets combined, 84 percent fall short based on total financial assets, and 65 percent fall short based on net worth."
The Retirement Savings Crisis: Is It Worse Than We Think?
By Nari Rhee, PhD
June 2013
https://www.copera.org/pdf/Misc/NIRS6-13.pdf
The Rent is too Damn High
"The collective retirement savings gap among working households age 25-64 ranges from $6.8 to $14 trillion, depending on the financial measure. A large majority of households fall short of conservative retirement savings targets for their age and income based on working until age 67. Based on retirement account assets, 92 percent of working households do not meet targets. Under broader measures, most households still have insufficient assets: 90 percent fall short based on retirement account balances and estimated DB pension assets combined, 84 percent fall short based on total financial assets, and 65 percent fall short based on net worth."
The Retirement Savings Crisis: Is It Worse Than We Think?
By Nari Rhee, PhD
June 2013
https://www.copera.org/pdf/Misc/NIRS6-13.pdf
The Rent is too Damn High
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Re: Savings rate of -2% for those under 35 - WSJ
Much of this is cultural. The only thing that seems to make most people save at a high rate is the threat of death or penury via some major catastrophe. Then you get "generational memory" of things like the Great Depression, the Great Leap Forward, famines, etc. The people who live through those events tend to save much more. The rest, not so much.
Re: Savings rate of -2% for those under 35 - WSJ
How large is your company? What is your salary? I'm just curious, I've worked for a lot of companies for someone my age (39), some of them pretty po-dunk and I've never been without a 401k. Without a match yes, but without a plan, no.meaghansketch wrote:I'm on the older edge of the millenials (32) and in a creative field. I don't have access to a 401(k) (to say nothing of a match!) or a pension and most of my peers are in the same boat. Either we are 'self-employed' or working at small companies that don't offer benefits. Even though I am now working for a much larger company (and finally have health insurance because of it!), there is still no 401(k). Yes, my job and my field are are a result of my choices, but I consider myself smart to have started thinking about retirement at age 24-- it wasn't at all on my radar at 16, 17, and 18, when I was deciding my career path. And yes, I am saving-- in IRAs and in a taxable account. But having a maximum $5500/year tax-advantaged savings rather than a maximum of $20,000+ is a huge disadvantage.
I don't know the statistics on who does and doesn't have access to 401(k)s but it's not only low-wage workers who are left out. I don't understand why that tax advantage can't be made available to everyone, regardless of their job.
Re: Savings rate of -2% for those under 35 - WSJ
This thread has run its course and is locked (not personal nor actionable). See: A reminder that non-investing general comment threads are OT
- It must be personal. In other words, you must be asking about your own situation. You can also ask on behalf of someone specific, such as a family member.
- It must be actionable. You must be able to do something specific with the replies that will make a difference in your situation.