"Millennials may need to double how much they save for retirement"

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Pajamas
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Re: "Millennials may need to double how much they save for retirement"

Post by Pajamas » Mon Jan 16, 2017 1:29 pm

10YearPlan wrote:
vitaflo wrote: 10+ years ago, I was working with our 401(k) administrator at our company to try to improve participation in the plan. Less than 50% of our employees participated. And, of the ones who did participate, a very small percentage maxed. These were not low income and/or very young people either. I would estimate the average age to be early-mid 30s and average salary $60-$85k at that time.
The best way to increase participation in a plan is to make participation the default instead of requiring employees to opt in.

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Re: "Millennials may need to double how much they save for retirement"

Post by Rodc » Mon Jan 16, 2017 4:43 pm

mac808 wrote:
livesoft wrote:
mac808 wrote:It's hard to imagine an equivalent generational market trend that would distribute as much wealth into the pockets of millennials, but I admit it's possible.
Maybe millennials will inherit more from their parents than the previous generation?
Yes, I think they will, and I think it will become an increasingly important source of economic support for their generation. I also think that the trend towards greater inheritances (along with related trends like assortive mating and wealthier folks having a lower birth rate) will further widen the ''wealth gap'' or whatever you want to call it, and will further fuel political turbulence.

Given all the stories about what a lousy job most boomers have done saving for retirement, something like 50% having saved nothing, and given the high cost of healthcare and assisted living, I suspect few are going to get enough inheritance to write home about and certainly not enough to fund in any meaningful way a retirement for their kids.

Added:
Image

Median is about $150K, and few will have pensions, so most will largely be living on SS.
Last edited by Rodc on Mon Jan 16, 2017 4:53 pm, edited 1 time in total.
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Re: "Millennials may need to double how much they save for retirement"

Post by livesoft » Mon Jan 16, 2017 4:47 pm

I inherited about $50K from my mom and dad combined.
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Re: "Millennials may need to double how much they save for retirement"

Post by Rodc » Mon Jan 16, 2017 4:51 pm

livesoft wrote:I inherited about $50K from my mom and dad combined.
Me too. In fact $8K from Mom $50K from MIL.

To be fair my parents did pay for 3.5 years of my undergrad and took excellent care of me, and did not require any support in old age.
Last edited by Rodc on Mon Jan 16, 2017 6:34 pm, edited 1 time in total.
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Re: "Millennials may need to double how much they save for retirement"

Post by kjvmartin » Mon Jan 16, 2017 6:11 pm

livesoft wrote:I inherited about $50K from my mom and dad combined.
I'll inherit some funeral expenses 8-)

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Re: "Millennials may need to double how much they save for retirement"

Post by Caduceus » Tue Jan 17, 2017 8:59 am

I think the retirement incentives structure is just needlessly complicated. Most people do not enjoy or make the effort to study these things on their own even if those on the Bogleheads forum do.

I know many people who just put retirement savings on a backburner because they don't understand and are intimidated by the effort required to understand how IRA deductions, Roth vs. Traditional, 401k vs IRA, etc. all work.

Most studies have shown that 401ks will not be capable of replacing the payouts that older generations had with their corporate pensions. And much of this is that the voluntary savings rate into 401ks/IRAs is just lower than the forced savings rate with pensions.

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Re: "Millennials may need to double how much they save for retirement"

Post by Rodc » Tue Jan 17, 2017 9:57 am

Caduceus wrote:I think the retirement incentives structure is just needlessly complicated. Most people do not enjoy or make the effort to study these things on their own even if those on the Bogleheads forum do.

I know many people who just put retirement savings on a backburner because they don't understand and are intimidated by the effort required to understand how IRA deductions, Roth vs. Traditional, 401k vs IRA, etc. all work.

Most studies have shown that 401ks will not be capable of replacing the payouts that older generations had with their corporate pensions. And much of this is that the voluntary savings rate into 401ks/IRAs is just lower than the forced savings rate with pensions.
The majority never had pensions and of those that did many had very small ones. So most have always been on their own. A 401K, IRA, Roth are all an improvement on no retirement tax advantaged accounts for most people who do not have and would not have had pensions.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

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Re: "Millennials may need to double how much they save for retirement"

Post by Da5id » Tue Jan 17, 2017 10:26 am

Rodc wrote:
Caduceus wrote:I think the retirement incentives structure is just needlessly complicated. Most people do not enjoy or make the effort to study these things on their own even if those on the Bogleheads forum do.

I know many people who just put retirement savings on a backburner because they don't understand and are intimidated by the effort required to understand how IRA deductions, Roth vs. Traditional, 401k vs IRA, etc. all work.

Most studies have shown that 401ks will not be capable of replacing the payouts that older generations had with their corporate pensions. And much of this is that the voluntary savings rate into 401ks/IRAs is just lower than the forced savings rate with pensions.
The majority never had pensions and of those that did many had very small ones. So most have always been on their own. A 401K, IRA, Roth are all an improvement on no retirement tax advantaged accounts for most people who do not have and would not have had pensions.
Feels like the complexity of retirement vehicles mentioned above is but a convenient excuse for preferring current spending over saving for a distant future.

And yes, most people working in private industry never had defined benefit pensions in the US. Don't think it was ever more than half, as many people have always worked in small businesses or otherwise weren't in a job that had a pension. e.g. https://www.ssa.gov/policy/docs/ssb/v69n3/v69n3p1.html describes some of the transition between defined benefit. According to it, 38% of private workers in 1980 had such a plan, compared to 20% in 2008.

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Re: "Millennials may need to double how much they save for retirement"

Post by CoAndy » Tue Jan 17, 2017 10:33 am

awizard wrote:
Da5id wrote:
awizard wrote:This is my favorite part:

"Among plan changes BlackRock suggests: higher default rates for employee contributions, requiring employees to contribute more to get the full match, auto enrolling older workers in “catch-up” programs that allow them to save more tax deferred, and making loans and early withdrawals more difficult."

So lets put more on the employees. How about suggesting that employers should match to higher amounts or better matching past $1 for $1.
You know that the money for a match is not magically appearing, but rather is part of total employee compensation. It is unclear that most millennials will prefer the "hidden" compensation of a higher match vs the more immediately gratifying higher salary?
I never discussed what the employee wants or where the money comes from to support the system. I just find it ironic that some people, BlackRock, are focused on finding ways to require the employee to save more. I would bet that savings rates to 401Ks would increase if the match was more generous vs. requiring them to save more to get the same match. At some point I would question why I should save to a 401K if, for example, you had to save 10% to get a 2% match. Now offer me a 10% match for 5% save and I would max that sucker out. :sharebeer
And on the other end, I know a few coworkers who don't put anything in their 401(k), despite an immediate 3% match. Boggles the mind but there you have it.

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Re: "Millennials may need to double how much they save for retirement"

Post by toto238 » Tue Jan 17, 2017 11:17 am

Have we considered the significant costs of student loans on millenials as part of this?

I save between 20-25% of my income per year, with an additional 15-20% going towards student loans. But due to my student loans I estimate I will be around age 30 before I reach a net worth of zero.

Even a small amount of loans can very much weigh down on a millennial, reducing possible career options. When you have student loan payments that need to be made every month, you can't take that unpaid internship, you spend your free time doing overtime or building a side hustle/job instead of networking, and you can't afford to risk your mediocre income stream to attempt to make a leap up to a riskier but higher-paying income stream.

With all those headwinds, it doesn't surprise me that many millenials are getting a late start to retirement saving. And when you don't start saving until your 30s, you need to save more.

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Re: "Millennials may need to double how much they save for retirement"

Post by toto238 » Tue Jan 17, 2017 11:19 am

MossySF wrote:
jimb_fromATL wrote: Just saw a news article somewhere on TV this morning that the average millennial spends a bigger percentage of their budget for coffee than for retirement funding.
So $30/day coffee habit means they could be saving as much as $11K a year which is a pretty good number.
How does a human being spend $30 a day on coffee? Do they buy 10 cups then throw out the other 9?

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Re: "Millennials may need to double how much they save for retirement"

Post by NotWhoYouThink » Tue Jan 17, 2017 11:30 am

I suspect few are going to get enough inheritance to write home about
To whom would we write?

These articles are mostly fluff, but they don't bother me if they have the effect of getting people to think about saving and investing for retirement. With the advances in health care, the retirement plan many of our elders successfully employed - die before the money runs out - is no longer viable.

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Re: "Millennials may need to double how much they save for retirement"

Post by Rodc » Tue Jan 17, 2017 11:32 am

Da5id wrote:
Rodc wrote:
Caduceus wrote:I think the retirement incentives structure is just needlessly complicated. Most people do not enjoy or make the effort to study these things on their own even if those on the Bogleheads forum do.

I know many people who just put retirement savings on a backburner because they don't understand and are intimidated by the effort required to understand how IRA deductions, Roth vs. Traditional, 401k vs IRA, etc. all work.

Most studies have shown that 401ks will not be capable of replacing the payouts that older generations had with their corporate pensions. And much of this is that the voluntary savings rate into 401ks/IRAs is just lower than the forced savings rate with pensions.
The majority never had pensions and of those that did many had very small ones. So most have always been on their own. A 401K, IRA, Roth are all an improvement on no retirement tax advantaged accounts for most people who do not have and would not have had pensions.
Feels like the complexity of retirement vehicles mentioned above is but a convenient excuse for preferring current spending over saving for a distant future.

And yes, most people working in private industry never had defined benefit pensions in the US. Don't think it was ever more than half, as many people have always worked in small businesses or otherwise weren't in a job that had a pension. e.g. https://www.ssa.gov/policy/docs/ssb/v69n3/v69n3p1.html describes some of the transition between defined benefit. According to it, 38% of private workers in 1980 had such a plan, compared to 20% in 2008.
It would be nice to have this all simplified, and it seems like it should be doable of our elected officials decided (1) they wanted to and (2) they would work together.

One IRA and one Roth type option with high allowed limits that either an individual or a company could direct funds into. Employers would not need to run or pay someone to run 401K, 403B, etc programs. Just send the match and employee contribution just as they send money to checking accounts, but into retirement accounts.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

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Re: "Millennials may need to double how much they save for retirement"

Post by Rodc » Tue Jan 17, 2017 11:34 am

NotWhoYouThink wrote:
I suspect few are going to get enough inheritance to write home about
To whom would we write?
https://en.wikipedia.org/wiki/Colloquialism
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

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Re: "Millennials may need to double how much they save for retirement"

Post by livesoft » Tue Jan 17, 2017 11:48 am

toto238 wrote:Have we considered the significant costs of student loans on millenials as part of this?
My impression is that most millennials don't go to college and don't have college loans.
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Re: "Millennials may need to double how much they save for retirement"

Post by NotWhoYouThink » Tue Jan 17, 2017 11:53 am

Even a colloquialism has context. The context for "writing home" is a young adventurer writing home to his family about his successes or discoveries on his adventure or new life. But if Ma and Pa die and leave an inheritance, there is no one to whom to address those letters.

Maybe nothing to tweet about?

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Re: "Millennials may need to double how much they save for retirement"

Post by Rainmaker41 » Tue Jan 17, 2017 11:55 am

Rodc wrote:It would be nice to have this all simplified, and it seems like it should be doable of our elected officials decided (1) they wanted to and (2) they would work together.

One IRA and one Roth type option with high allowed limits that either an individual or a company could direct funds into. Employers would not need to run or pay someone to run 401K, 403B, etc programs. Just send the match and employee contribution just as they send money to checking accounts, but into retirement accounts.
This is my favorite idea as well. $18k + $5.5k = $23.5k individual 'consolidated' IRA & Roth IRA limit; $55,000 combined employer & employee contribution limit. ERISA-level 401k creditor protections, age 55 for penalty-free withdrawals, and each person can dump everything into Vanguard if they want to.

I doubt it will happen, because this might negatively impact retirement plan administrator fees...
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Re: "Millennials may need to double how much they save for retirement"

Post by bigred77 » Tue Jan 17, 2017 12:14 pm

Rainmaker41 wrote:
Rodc wrote:It would be nice to have this all simplified, and it seems like it should be doable of our elected officials decided (1) they wanted to and (2) they would work together.

One IRA and one Roth type option with high allowed limits that either an individual or a company could direct funds into. Employers would not need to run or pay someone to run 401K, 403B, etc programs. Just send the match and employee contribution just as they send money to checking accounts, but into retirement accounts.
This is my favorite idea as well. $18k + $5.5k = $23.5k individual 'consolidated' IRA & Roth IRA limit; $55,000 combined employer & employee contribution limit. ERISA-level 401k creditor protections, age 55 for penalty-free withdrawals, and each person can dump everything into Vanguard if they want to.

I doubt it will happen, because this might negatively impact retirement plan administrator fees...
It would be nice for Bogleheads but there's no push for it. The majority of America isn't even saving $5,500 into their current IRAs. The best change that has occurred recently for the median american is automatic 401k signups with a target date default option. For the boglehead community, choice and flexibility would be awesome. For the median american, they will be financial advisers holding free seminars and luncheons in every workplace they can convince to let them in the door. Even more people will be signing up for 1% AUM fees, 1%-2% ER actively managed funds with loads.

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Re: "Millennials may need to double how much they save for retirement"

Post by toto238 » Tue Jan 17, 2017 12:32 pm

livesoft wrote:
toto238 wrote:Have we considered the significant costs of student loans on millenials as part of this?
My impression is that most millennials don't go to college and don't have college loans.
The stats I have seen say otherwise:

https://www.bls.gov/news.release/hsgec.nr0.htm
Of the 3.0 million youth age 16 to 24 who graduated from high school between January
and October 2015, about 2.1 million (69.2 percent) were enrolled in college in October.
The college enrollment rate of recent high school graduates in October 2015 was little
different from the rate in October 2014 (68.4 percent). For 2015 high school graduates,
the college enrollment rate was 72.6 percent for young women and 65.8 percent for young
men. The college enrollment rate of recent Asian (83.0 percent) graduates was higher
than for their White (71.1 percent), Hispanic (68.9 percent), and Black (54.6 percent)
counterparts.
So approximately 70% of millenials today are enrolling in college straight out of High School. A higher portion go to college at some point in time of their life after a gap year (or gap decade in some cases). Let's call it 80% total go to college for at least some period of time in the decade after high school. The most recent 6-year completion rate I've seen is approximately 60% (https://nces.ed.gov/fastfacts/display.asp?id=40). So 60% of 80% is about 48%.

so the end result is that somewhere between 40-60% of Millennials are completing college degrees. A much higher portion are attending for at least some period of time whether they finish or not. For any of these, student loans can be a very significant detractor from their ability to save.

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Re: "Millennials may need to double how much they save for retirement"

Post by Runner01 » Tue Jan 17, 2017 12:34 pm

Its unfortunate to say but I think the only way to ensure that more Americans prepare for retirement is to expand government programs like Social Security. When saving is voluntary, people will always have an excuse not to. I personally would not like to see an increase in payroll taxes however I also don't want a bunch of elderly people robbing my home when Social Security isn't enough.

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Re: "Millennials may need to double how much they save for retirement"

Post by Pajamas » Tue Jan 17, 2017 12:36 pm

toto238 wrote: How does a human being spend $30 a day on coffee? Do they buy 10 cups then throw out the other 9?
$30 sounds high but there are plenty of drinks at Starbucks that are over $5 with tax and I know several people who drink three a day.
livesoft wrote: My impression is that most millennials don't go to college and don't have college loans.
Supposedly the majority of millennials have at least some college, more than any other generation.

https://www.whitehouse.gov/sites/defaul ... report.pdf

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Re: "Millennials may need to double how much they save for retirement"

Post by bigred77 » Tue Jan 17, 2017 12:48 pm

Runner01 wrote:Its unfortunate to say but I think the only way to ensure that more Americans prepare for retirement is to expand government programs like Social Security. When saving is voluntary, people will always have an excuse not to. I personally would not like to see an increase in payroll taxes however I also don't want a bunch of elderly people robbing my home when Social Security isn't enough.
While I personally don't fear elderly criminals as much as you might :mrgreen: I do agree that expanding the SS program would be the biggest benefit for all Americans in terms of retirement security. I don't even mind an increase in payroll taxes as long as the increased benefits are available to all once retirement age is reached (and now I will stop after possibly already crossing the line into political discussion). Scott Burns writes about this topic quite a bit if you are interested. I largely agree with his opinions on the topic.

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Re: "Millennials may need to double how much they save for retirement"

Post by bigred77 » Tue Jan 17, 2017 12:52 pm

toto238 wrote:
So approximately 70% of millenials today are enrolling in college straight out of High School. A higher portion go to college at some point in time of their life after a gap year (or gap decade in some cases). Let's call it 80% total go to college for at least some period of time in the decade after high school. The most recent 6-year completion rate I've seen is approximately 60% (https://nces.ed.gov/fastfacts/display.asp?id=40). So 60% of 80% is about 48%.

so the end result is that somewhere between 40-60% of Millennials are completing college degrees. A much higher portion are attending for at least some period of time whether they finish or not. For any of these, student loans can be a very significant detractor from their ability to save.
The saddest result is when people go to college, incur student loans, but don't graduate. Then they have financial burdens but don't experience the increased income potential that comes with the actual degree. It can lead to some awfully tough situations.

That 60%, 6yr completion rate is scary IMO.

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Re: "Millennials may need to double how much they save for retirement"

Post by McGilicutty » Tue Jan 17, 2017 12:55 pm

I'm glad I'm not a millenial. They have super-high college costs leading to sky-high student loan debt. Plus, housing costs are through the roof for them while their job prospects suck.

When I went to college, you could pay for it with a part-time job. Now, you need to work 20 years after college just to pay off your student debt. Retirement for millennials is mostly just a dream. With automation and loose immigration policies, most of them will be lucky to get a decent job.

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Re: "Millennials may need to double how much they save for retirement"

Post by BrandonBogle » Tue Jan 17, 2017 1:07 pm

Well I'm a millennial saving 30% or more of his income (based on whether you want to add my immediately-vested 7% employer match into the denominator) with parents who are struggling with retirement, but not eating Alpo. Social Security ensures they have a roof over their head and meager savings (maybe 5% or so during the working career) helps them have a car and decent food. There have been occasions were they tapped into the Bank of Son.

Meanwhile, while growing up, they fed and bathed me. I got a 170k+ mile car for my 16th birthday as my mother moved up to a Toyota Corolla (I got her old 626), but it still was a boost to be handed a car. However, insurance, my own car first car two years later, all of college, and everything I saved up all came out of my own pocket.

However, a huge boost to my financial life was mom having me move back in after doing my Bachelor's degree. I couldn't get a career job and my barely over minimum wage job was just too much to (1) make ends meet and (2) leave sufficient time for classes + studies for my Master's degree. After emptying out my life savings to have a roof over my head and eat, mom offered (and I accepted) for me to quit that dead-end job and move back home. I got a decent job a week after moving home unrelated to my degree, but they also gave me some tuition reimbursement to continue my studies. Thankfully, I was also able to switch to being a "distance student" and thus, didn't have to change schools or retake any classes. I stayed at home for about 3 years, finishing my degree and searching for a job while I had no "rent" to pay.

That is what set me on course to retire. That, and being a Boglehead in spirit even before learning about Jack. I opened my first Roth IRA with my high school job that paid for my car insurance. Been maxing it out every year since. Granted, they were CDs until the end of my Bachelor's degree, but it was a start!

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Re: "Millennials may need to double how much they save for retirement"

Post by Rodc » Tue Jan 17, 2017 1:59 pm

toto238 wrote:
livesoft wrote:
toto238 wrote:Have we considered the significant costs of student loans on millenials as part of this?
My impression is that most millennials don't go to college and don't have college loans.
The stats I have seen say otherwise:

https://www.bls.gov/news.release/hsgec.nr0.htm
Of the 3.0 million youth age 16 to 24 who graduated from high school between January
and October 2015, about 2.1 million (69.2 percent) were enrolled in college in October.
The college enrollment rate of recent high school graduates in October 2015 was little
different from the rate in October 2014 (68.4 percent). For 2015 high school graduates,
the college enrollment rate was 72.6 percent for young women and 65.8 percent for young
men. The college enrollment rate of recent Asian (83.0 percent) graduates was higher
than for their White (71.1 percent), Hispanic (68.9 percent), and Black (54.6 percent)
counterparts.
So approximately 70% of millenials today are enrolling in college straight out of High School. A higher portion go to college at some point in time of their life after a gap year (or gap decade in some cases). Let's call it 80% total go to college for at least some period of time in the decade after high school. The most recent 6-year completion rate I've seen is approximately 60% (https://nces.ed.gov/fastfacts/display.asp?id=40). So 60% of 80% is about 48%.

so the end result is that somewhere between 40-60% of Millennials are completing college degrees. A much higher portion are attending for at least some period of time whether they finish or not. For any of these, student loans can be a very significant detractor from their ability to save.
Only 81% graduate from high school

81% of 69% = 56%

Still above half! I am impressed as I thought it would be below 50%
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Re: "Millennials may need to double how much they save for retirement"

Post by livesoft » Tue Jan 17, 2017 2:40 pm

Lots of interesting statistics, but lots of misinterpretation of those stats as well. :)
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Re: "Millennials may need to double how much they save for retirement"

Post by toto238 » Tue Jan 17, 2017 2:49 pm

livesoft wrote:Lots of interesting statistics, but lots of misinterpretation of those stats as well. :)
Which part do you believe was misinterpreted?

My original point was that student loans are a significant barrier for many Millennials. You asserted that most Millennials don't even go to college. I demonstrated with statistics that this is likely false. It appears that a strong majority of Millennials do in fact attend college for at least some period of time. Many at least come out with a degree and higher earning potential, whereas many others come out without a degree but still with debt.

I never argued that a majority of all Millennials are struggling or suffering from massive student loan debt. But even 10-20% suffering from it makes it a significant issue for our generation when compared to the last generation where you could pay your entire college tuition with your summer job or take out loans and pay them all off in 1-2 years. I suspect the number is higher based on the evidence we have available:

http://www.marketwatch.com/story/americ ... 2016-01-15

This article says that 40 million Americans have student loans, that 70% of Bachelor's degree recipients graduate with debt, and that this debt adds up to $1.2trillion (or roughly $30,000 per debtor). Roughly 25% of everyone with student loans is in delinquency or default. That's 10 million people. Include people who are still making their payments but suffer immensely from it and that number probably doubles. And I can guarantee you that Millennials make up a majority of those debtors.

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Re: "Millennials may need to double how much they save for retirement"

Post by goodenyou » Tue Jan 17, 2017 5:09 pm

toto238 wrote:
livesoft wrote:Lots of interesting statistics, but lots of misinterpretation of those stats as well. :)
Which part do you believe was misinterpreted?

My original point was that student loans are a significant barrier for many Millennials. You asserted that most Millennials don't even go to college. I demonstrated with statistics that this is likely false. It appears that a strong majority of Millennials do in fact attend college for at least some period of time. Many at least come out with a degree and higher earning potential, whereas many others come out without a degree but still with debt.

I never argued that a majority of all Millennials are struggling or suffering from massive student loan debt. But even 10-20% suffering from it makes it a significant issue for our generation when compared to the last generation where you could pay your entire college tuition with your summer job or take out loans and pay them all off in 1-2 years. I suspect the number is higher based on the evidence we have available:

http://www.marketwatch.com/story/americ ... 2016-01-15

This article says that 40 million Americans have student loans, that 70% of Bachelor's degree recipients graduate with debt, and that this debt adds up to $1.2trillion (or roughly $30,000 per debtor). Roughly 25% of everyone with student loans is in delinquency or default. That's 10 million people. Include people who are still making their payments but suffer immensely from it and that number probably doubles. And I can guarantee you that Millennials make up a majority of those debtors.

I sign the checks for our payroll every month and I am always amazed on how many employee have their wages garnished for student loans (and child support too!). I imagine U of Phoenix has done very well.
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Re: "Millennials may need to double how much they save for retirement"

Post by livesoft » Tue Jan 17, 2017 5:12 pm

toto238 wrote:This article says that 40 million Americans have student loans, that 70% of Bachelor's degree recipients graduate with debt, and that this debt adds up to $1.2trillion (or roughly $30,000 per debtor).
I know your sentence does not mean that 70% of Bachelor's degree recipients graduated with debt that adds up to $1.2 trillion.

A significant fraction of the $1.2 trillion debt is for post-bachelor's education such as med school, law school, MBA, other masters degrees, etc.
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Re: "Millennials may need to double how much they save for retirement"

Post by toto238 » Tue Jan 17, 2017 5:50 pm

livesoft wrote:
toto238 wrote:This article says that 40 million Americans have student loans, that 70% of Bachelor's degree recipients graduate with debt, and that this debt adds up to $1.2trillion (or roughly $30,000 per debtor).
I know your sentence does not mean that 70% of Bachelor's degree recipients graduated with debt that adds up to $1.2 trillion.

A significant fraction of the $1.2 trillion debt is for post-bachelor's education such as med school, law school, MBA, other masters degrees, etc.
I understand that. $1,200,000,000,000 in debt divided by 40,000,000 people is $30,000 per borrower (roughly). I know that some of that are people with advanced degrees. But if you read the article closely you'll see that new graduates graduated with an average of $35,000 in debt.

http://www.marketwatch.com/story/class- ... 2015-05-08
The class of 2015 will each graduate with $35,051 in student debt on average, according to an analysis from Mark Kantrowitz, the publisher of Edvisors.com, a website that provides information to parents and students about college costs and financial aid. That’s about $2,000 more than their peers who graduated in 2014, though the share of students graduating with debt remained roughly the same as last year at about 70%.
So recent Bachelor's degree recipients actually have a higher debt burden on average than the average American student borrower. If anything, those grad school individuals are bringing down the average due to their significantly higher earnings allowing them to pay down their loans much quicker.

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Re: "Millennials may need to double how much they save for retirement"

Post by livesoft » Tue Jan 17, 2017 6:02 pm

toto238 wrote: But if you read the article closely you'll see that new graduates graduated with an average of $35,000 in debt.
I read the article and looked up Mark Kantrowitz who gave that figure. I think we all know what Fake News is and need more than a quickie on MarketWatch to get our facts straight.

I would've guessed that those grad students would bring the average UP since the costs for professional school is higher and much fewer students go to such schools. There are many physicians on this forum writing about their loans. :) And yes, I know that med schools loans are not the biggest fraction of student loans.
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Re: "Millennials may need to double how much they save for retirement"

Post by burt » Tue Jan 17, 2017 6:26 pm

Wondering...

Are Millennials not saving enough or are they not making enough ?
(Wages have not kept pace with productivity since the 70's)

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Re: "Millennials may need to double how much they save for retirement"

Post by livesoft » Tue Jan 17, 2017 6:27 pm

My daughter is a millennial with a good job. She doesn't save enough. She spends her money like there is no tomorrow. So that's a data point of one (1).
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Re: "Millennials may need to double how much they save for retirement"

Post by toto238 » Tue Jan 17, 2017 6:28 pm

livesoft wrote:
toto238 wrote: But if you read the article closely you'll see that new graduates graduated with an average of $35,000 in debt.
I read the article and looked up Mark Kantrowitz who gave that figure. I think we all know what Fake News is and need more than a quickie on MarketWatch to get our facts straight.

I would've guessed that those grad students would bring the average UP since the costs for professional school is higher and much fewer students go to such schools. There are many physicians on this forum writing about their loans. :) And yes, I know that med schools loans are not the biggest fraction of student loans.
If we took a random poll of people on this forum and assumed it was representative of the United States as a whole, we would have an extremely warped and inaccurate view of our world. The median household income in America is roughly $50,000. Meaning half of all American household make less than that. I would guess that the median income for people on this forum is easily double that.

As you mentioned, med school loans and the like are only a small portion of the overall student loan debt in America. One of the biggest reasons being that they are more likely to pay their debts off within 1-2 years after school, whereas bachelor's degree students are usually still paying their loans off after 10-20 years.

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Re: "Millennials may need to double how much they save for retirement"

Post by livesoft » Tue Jan 17, 2017 6:33 pm

toto238 wrote:..., whereas bachelor's degree students are usually still paying their loans off after 10-20 years.
I don't believe it. You stated the average debt is about the price of a good car. Car loans are not 10 years. If these folks bought a crappy used car and used their income for student loan payments, then there probably wouldn't be much of a student loan problem in my opinion.

Just like people need to be incentivized to save for retirement, they need to be incentivized to pay off their student loans quicker.

I mentor millennials who live all across the world. I teach milliennials from all over the world. I have children who are millennials. I talk to all their millennial friends. I have some perspective which is different from yours.
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Re: "Millennials may need to double how much they save for retirement"

Post by burt » Tue Jan 17, 2017 7:03 pm

toto238 wrote:
livesoft wrote:
toto238 wrote: But if you read the article closely you'll see that new graduates graduated with an average of $35,000 in debt.
I read the article and looked up Mark Kantrowitz who gave that figure. I think we all know what Fake News is and need more than a quickie on MarketWatch to get our facts straight.

I would've guessed that those grad students would bring the average UP since the costs for professional school is higher and much fewer students go to such schools. There are many physicians on this forum writing about their loans. :) And yes, I know that med schools loans are not the biggest fraction of student loans.
If we took a random poll of people on this forum and assumed it was representative of the United States as a whole, we would have an extremely warped and inaccurate view of our world. The median household income in America is roughly $50,000. Meaning half of all American household make less than that. I would guess that the median income for people on this forum is easily double that.

As you mentioned, med school loans and the like are only a small portion of the overall student loan debt in America. One of the biggest reasons being that they are more likely to pay their debts off within 1-2 years after school, whereas bachelor's degree students are usually still paying their loans off after 10-20 years.

Regarding: "The median household income in America is roughly $50,000."

Household, like father, mother and 2 kids ?
I would be hard pressed to support a family on that income..... let alone save.
And that's the median? Half of the households make less than that ? Sad and scary.

burt

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Re: "Millennials may need to double how much they save for retirement"

Post by Rodc » Tue Jan 17, 2017 7:29 pm

burt wrote:
toto238 wrote:
livesoft wrote:
toto238 wrote: But if you read the article closely you'll see that new graduates graduated with an average of $35,000 in debt.
I read the article and looked up Mark Kantrowitz who gave that figure. I think we all know what Fake News is and need more than a quickie on MarketWatch to get our facts straight.

I would've guessed that those grad students would bring the average UP since the costs for professional school is higher and much fewer students go to such schools. There are many physicians on this forum writing about their loans. :) And yes, I know that med schools loans are not the biggest fraction of student loans.
If we took a random poll of people on this forum and assumed it was representative of the United States as a whole, we would have an extremely warped and inaccurate view of our world. The median household income in America is roughly $50,000. Meaning half of all American household make less than that. I would guess that the median income for people on this forum is easily double that.

As you mentioned, med school loans and the like are only a small portion of the overall student loan debt in America. One of the biggest reasons being that they are more likely to pay their debts off within 1-2 years after school, whereas bachelor's degree students are usually still paying their loans off after 10-20 years.

Regarding: "The median household income in America is roughly $50,000."

Household, like father, mother and 2 kids ?
I would be hard pressed to support a family on that income..... let alone save.
And that's the median? Half of the households make less than that ? Sad and scary.

burt
https://en.wikipedia.org/wiki/Household ... ted_States

Median is $56K. But a lot gets hidden in that sort of statistic. I note that if you start at $35K when young and a couple and over time increase to $77K you have a median of $56K.
The highest median income per member of household was among those between the ages of 54 and 64 with $30,544
I don't know the average family size but even if the median family had two adults and one kid, this is over $90K when the family is well along in middle age.

Not as scary as it first seems.

But even that hides a lot. More scary are the numbers by education and race.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

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Re: "Millennials may need to double how much they save for retirement"

Post by Day9 » Tue Jan 17, 2017 7:41 pm

Rodc wrote: ...
But even that hides a lot. More scary are the numbers by education and race.
Especially net worth by demographic. The differences are much more pronounced than income.
I'm just a fan of the person I got my user name from

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Re: "Millennials may need to double how much they save for retirement"

Post by toto238 » Tue Jan 17, 2017 7:52 pm

Day9 wrote:
Rodc wrote: ...
But even that hides a lot. More scary are the numbers by education and race.
Especially net worth by demographic. The differences are much more pronounced than income.
You are unfortunately correct. The medium numbers for both income and net worth are depressing.

Here on Bogleheads, it stretches our minds to imagine raising a family on $56k per year. But the reality is that many people are doing just that on far less.

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Re: "Millennials may need to double how much they save for retirement"

Post by toto238 » Tue Jan 17, 2017 7:56 pm

livesoft wrote:
toto238 wrote:..., whereas bachelor's degree students are usually still paying their loans off after 10-20 years.
I don't believe it. You stated the average debt is about the price of a good car. Car loans are not 10 years. If these folks bought a crappy used car and used their income for student loan payments, then there probably wouldn't be much of a student loan problem in my opinion.

Just like people need to be incentivized to save for retirement, they need to be incentivized to pay off their student loans quicker.

I mentor millennials who live all across the world. I teach milliennials from all over the world. I have children who are millennials. I talk to all their millennial friends. I have some perspective which is different from yours.
I'm gonna back away from this conversation, because I believe it's become a bit less substantive having turned into basically "I know more about millennials because I am one" vs "I know more about millennials because I've met a bunch of 'em". I provided various statistics and cited my sources, whereas you have dismissed my arguments using anecdote and using appeals to your own authority.

While I appreciate the many contributions you have made to this forum over a long time, I don't believe your approach in this particular conversation has been as productive as it could have been. I look forward to future conversations that hopefully result in higher quality discussion.

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Re: "Millennials may need to double how much they save for retirement"

Post by ImmigrantSaver » Tue Jan 17, 2017 8:14 pm

livesoft wrote:My daughter is a millennial with a good job. She doesn't save enough. She spends her money like there is no tomorrow. So that's a data point of one (1).
If she is just out of college and in her first job, the spending spree is understandable (btdt). Give her a year or two to get it out of the system! I remember at first loathing putting money at 401K so much because I couldn't take them out! I only did it because someone I highly regarded at work advised it. I wish he told me of Roth IRA back then :(

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Re: "Millennials may need to double how much they save for retirement"

Post by Rodc » Tue Jan 17, 2017 8:14 pm

Day9 wrote:
Rodc wrote: ...
But even that hides a lot. More scary are the numbers by education and race.
Especially net worth by demographic. The differences are much more pronounced than income.
Indeed.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

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Re: "Millennials may need to double how much they save for retirement"

Post by livesoft » Tue Jan 17, 2017 8:19 pm

@toto238, no worries on that. I was trying to find some original sources for student loan information rather than anecdotal news articles, but it is not easy.

https://studentloanhero.com/student-loa ... tatistics/ states
About 40 percent of the $1 trillion student loan debt was used to finance graduate and professional degrees.
And
http://ticas.org/posd/home
http://ticas.org/sites/default/files/pu ... of2015.pdf
Colleges are not required to report debt levels for their graduates, and available federal
data do not provide the typical debt for bachelor’s degrees or include private loans.
To estimate national and state averages, we used the most recent available figures,
which were provided voluntarily by more than half of all public and nonprofit bachelor’s
degree-granting four-year colleges. The limitations of relying on voluntarily reported
data underscore the need for federal collection of cumulative student debt data for all
schools. For more about types of currently available debt data, see page 7. For more
about for-profit colleges, for which there are almost no similar data, see page 2.
It is hard to pin down the percent of millennials who have college debt because some places say they are "in school", but that includes a large number still in high school. I read that 61% of adult Millennials have attended college, but elsewhere that only 19% of Millennials have a college degree. I know many Millennials that take a class or two in Community Colleges. Do they have college debt already? Maybe, but it had better not be $30K+ or even $10K+.

Do Millennials sacrifice daily pleasures such as coffee, soft drinks, netflix, cable TV, cell phone plans, gym memberships, attending high priced sporting events and concerts to pay down their student loans? Here's a funny video on that: https://www.youtube.com/watch?v=RGvrmltfMrA

And a completely different video: Millennials in the Workplace
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Re: "Millennials may need to double how much they save for retirement"

Post by BrandonBogle » Tue Jan 17, 2017 8:49 pm

livesoft wrote: Here's a funny video on that: https://www.youtube.com/watch?v=RGvrmltfMrA
That is hilarious. Sadly though, I have actually met some of my peers that match that :(

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Re: "Millennials may need to double how much they save for retirement"

Post by livesoft » Tue Jan 17, 2017 9:09 pm

@toto238, this is a kind of anecdotal news article that you may not believe, but it's the Washington Post from 2013 but co-authored by the Provost of Stanford University:
https://www.washingtonpost.com/news/inn ... ba940d042b
3. On average, students are now borrowing $______ to pay for their college education.

This is a myth, or at the very least misleading, for almost any figure reported in the national press. [….]
One has to read their reasoning in the article, but they state:
As you can see, the median debt (i.e., 50th percentile) level for all graduating seniors is slightly above $10,000 for those receiving a bachelor’s degree. This is probably less than an average new car loan.
Last edited by livesoft on Tue Jan 17, 2017 9:18 pm, edited 1 time in total.
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Re: "Millennials may need to double how much they save for retirement"

Post by student » Tue Jan 17, 2017 9:12 pm

livesoft wrote:
toto238 wrote:..., whereas bachelor's degree students are usually still paying their loans off after 10-20 years.
I don't believe it. You stated the average debt is about the price of a good car. Car loans are not 10 years. If these folks bought a crappy used car and used their income for student loan payments, then there probably wouldn't be much of a student loan problem in my opinion.
+1. Or take public transportation if one lives in a city with a decent system.

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Re: "Millennials may need to double how much they save for retirement"

Post by McGilicutty » Tue Jan 17, 2017 9:24 pm

A lotta' bitchin' about millenials in this thread. Let's balance it out with a little about the baby boomers: https://www.youtube.com/watch?v=V9bVnQPaj48

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Re: "Millennials may need to double how much they save for retirement"

Post by livesoft » Tue Jan 17, 2017 9:30 pm

student wrote:+1. Or take public transportation if one lives in a city with a decent system.
One doesn't need to live anywhere with a decent public transportation system. I road a bike to work or walked for 21 years starting in high school. I would not let my kids ride on some of the roads I had to use. I worked until 11 pm one job and the night shift at another one, so I often road my bike in the dark, rain, snow, heat, city, rural, whatever.

I didn't have a car until 7 years after high school when I got married. We were a one car family for another 7 years.
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Re: "Millennials may need to double how much they save for retirement"

Post by toto238 » Tue Jan 17, 2017 9:57 pm

livesoft wrote:
student wrote:+1. Or take public transportation if one lives in a city with a decent system.
One doesn't need to live anywhere with a decent public transportation system. I road a bike to work or walked for 21 years starting in high school. I would not let my kids ride on some of the roads I had to use. I worked until 11 pm one job and the night shift at another one, so I often road my bike in the dark, rain, snow, heat, city, rural, whatever.

I didn't have a car until 7 years after high school when I got married. We were a one car family for another 7 years.
Uphill both ways? In the snow? You must've lived in the same town as every other baby boomer I've ever heard complaining about the "younger generation".

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