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

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

Post by livesoft » Tue Jan 17, 2017 10:03 pm

True story: The only time I hit the broad side of car while riding my bike was when I was riding uphill in the snow. I was passing an 18-wheeler which had slowed to make a right-turn. A car pulled out in front of the 18-wheeler and didn't see nor expect me, so BAM! right into the driver's door. I flipped over the car, but since I was well-clothed because it was so freaking cold, I didn't get hurt.
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rxdawg21
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Re: "Millennials may need to double how much they save for reti

Post by rxdawg21 » Tue Jan 17, 2017 10:12 pm

I'm a millennial and also a pharmacist. I went to a public state school and had 4 of my 6 years of tuition paid for. Made about 8-10k a year working yet my rent cable and bills was Around 5k a year and that was sharing a place with several friends. I also ate a lot of food and spent money on spring break gas and the 1k or so of expenses/fees that weren't covered per semester. I averaged 6k of living expense debt per year for the first 4 years. Which meant I lived on about 13-14k. Unfortunately my last two years I racked up 50k in loans, the 5-6 k of living expenses and the 20k tuition. Ended up borrowing 72k that ended up being 80k with interest. Most my friends took 7-8 years to get their Pharm'd and with that about120-130k in loans and 20 ish in interest. It's a joke how fast tuition has risen (had I graduated just 8 years earlier tuition would have been 6k) my first year it was 13ish and rose to 20k in 4 years. It is definitely grad students and those that go to private school that skew the loan numbers. I'm amazed at my peers and friends in other degrees that took our > 100% of their gross salary. I'm amazed at the vacations and lifestyle they live all while having several k of credit card debt. The lack of financial knowledge and really giving a crap and delaying gratification is crazy. Heck I'm guilty of it to a degree and I know better, luckily I make good money. It's sad the lack of preparation and responsibility people take. But hey I see the same thing in healthcare. Refusal to take their medications or even change their lifestyle at all, yet they want great treatment when something goes wrong. Lack of personal responsibility and the repercussions of such is sad.

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

Post by student » Tue Jan 17, 2017 10:20 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.
I can't tell whether this is a negative feedback on my reply to you or a general feedback. My reply to you was positive as I was agreeing with you by saying "+1" and further saying that one doesn't even have to get a old car, one can use public transportation if a decent one is there.

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

Post by livesoft » Tue Jan 17, 2017 11:02 pm

^It was just general positive feedback. I interpreted your message as you intended.
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bigred77
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Re: "Millennials may need to double how much they save for retirement"

Post by bigred77 » Wed Jan 18, 2017 6:15 pm

I have really enjoyed reading this thread. I wanted to give one more anecdotal data point:

My brother and I are both millennials. We both went to the same undergrad (an expensive, "2nd tier", private school that would be scoffed at on this board for being a terrible value, probably some truth to that) for a combined 8.5 years. He spent 4 years at an in-state, public medical school. I spent 4 more years doing 2 business related masters degrees.

2016 combined total COA: $720,000!!!

I think the total COA over the years we actually attended is only around $550k (I had to estimate some things, so take that figure with a grain of salt). My parents contributed probably 60k over the years. My brother and I took out probably around 90k in combined student loans. The rest was paid for by grants, scholarships, employer tuition reimbursement, and quite frankly living in borderline deplorable housing situations during college (at least compared to our more well off peers in undergrad). We never worked while in undergrad. I worked while doing my grad programs. My brother did not work during medical school.

I paid off my undergrad loans within 12 months of graduating. I took out more for grad school and again repaid them within 12 months of graduation. My brother will have all of his loans paid off by the time he exits his residency program (so within 4 years of graduating medical school). But we were EXTREMELY lucky. 1.) Our parents were divorced and the parent with primary custody only made about 30k-40k, so we qualified for huge student aid packages. 2.) We were actually motivated to apply for 3rd party scholarships and we received enough small ones here and there were it added up. 3.) I was able to have a professional job lined up to start 1 week after undergrad graduation and I have never been unemployed since then. 4.) I found bogleheads within 3 months of graduating, started an aggressive financial plan, and then convinced and taught my brother how to do the same.

If my parents made more money, we would have been in a tough spot because our aid would have been reduced and even with more money my parents wouldn't have saved any up for college expenses. If I hadn't been so fortunate with my career progression, I could have been in a rougher spot. If my brother hadn't gotten into a VERY reasonable priced medical school he wouldn't be in the same situation. I see peers who do really struggle with student loans because they have 1 or 2 things outside their control go the wrong way on them. Nothing they can't clean up or handle, but enough to prevent them from being debt free with hundreds of thousands of dollars in the bank by age 30 like we see posted on Bogleheads.

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

Post by whomever » Wed Jan 18, 2017 8:55 pm

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".
Well, in my town we walked :-)

But we boomers had it easy. I recall visiting my grandparents around 1970. They were in their 70's and paid the rent by being caretakers on a farm. Plumbing was a rickety outhouse. You carried water from the well (which had a handle to pump) in buckets. To bathe, you put a galvanized tub in the middle of the kitchen and heated buckets on the stove.

Not every millennial is a slacker, though. We have a nephew who commuted several miles to work by bicycle. In winter. In Fairbanks.

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

Post by Durzo » Thu Jan 19, 2017 9:30 am

http://economicalmillennial.com/numbers ... -is-17612/

I'm just gonna leave this here.

For those curious a new study by Robert Farrington (The College Investor) found the average networth of Americans 18-30 is $-17,612. It takes into account all assets and all liabilities.

Reminds me of the Louis CK skit on negative money. "Millenials need $17,612 just to be broke. They can't afford something even if it's free. How much does that cost? Oh, its free. Dang I can't afford free right now."

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

Post by CyclingDuo » Thu Jan 19, 2017 12:08 pm

Pajamas wrote:
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.
Just how overweight are they drinking that many calories per day? :shock:

It's usually coupled: spending is out of control, and consuming too many calories is out of control.

Drink black coffee. :sharebeer
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livesoft
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Re: "Millennials may need to double how much they save for retirement"

Post by livesoft » Thu Jan 19, 2017 12:14 pm

Not much in that article that didn't apply to 18-30 year-olds when I was that age and my parents before me. You are supposed to have a negative net worth durinng those years. So Millennials can look forward to the days when they become the Old Farts just like everybody else did.
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Re: "Millennials may need to double how much they save for retirement"

Post by Rainmaker41 » Thu Jan 19, 2017 12:17 pm

CyclingDuo wrote:Drink black coffee. :sharebeer
...That you make at home with cheap equipment, such as a $5 plastic pour-over cone and a paper filter or a French press.

Daily intake coffee, daily expense $0.14 of ingredients and equipment, result caffeinated happiness. Daily intake coffee, daily expense paying for fancy esspresso machine or coffee on the go, result caffeinated misery.

Or maybe that's just me.
My username is not about money, but is my old online gaming username. I can't say that I make a great deal of money; I just hate spending it. Married the most loving woman in the world October 2017.

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

Post by CyclingDuo » Thu Jan 19, 2017 12:25 pm

Rainmaker41 wrote:
CyclingDuo wrote:Drink black coffee. :sharebeer
...That you make at home with cheap equipment, such as a $5 plastic pour-over cone and a paper filter or a French press.

Daily intake coffee, daily expense $0.14 of ingredients and equipment, result caffeinated happiness. Daily intake coffee, daily expense paying for fancy espresso machine or coffee on the go, result caffeinated misery.

Or maybe that's just me.
You're not alone! Our coffee maker at home costs about $90, and we use a gold washable filter. We usually get about 8-10 years out of a coffee maker before needing to replace. What's that, about 3000- 3500 x 2 (two of us) cups of coffee at a bare minimum out of one machine, plus all the beans/grounds along the way. It's the only way to go!

Even if drinking at work, cost is only .50 cents if I bring my own mug/cup at the coffee shop. That's all I pay per day if I need a jolt.
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Re: "Millennials may need to double how much they save for retirement"

Post by toto238 » Thu Jan 19, 2017 6:39 pm

whomever wrote:
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".
Well, in my town we walked :-)

But we boomers had it easy. I recall visiting my grandparents around 1970. They were in their 70's and paid the rent by being caretakers on a farm. Plumbing was a rickety outhouse. You carried water from the well (which had a handle to pump) in buckets. To bathe, you put a galvanized tub in the middle of the kitchen and heated buckets on the stove.

Not every millennial is a slacker, though. We have a nephew who commuted several miles to work by bicycle. In winter. In Fairbanks.
You see there are two different attitudes you can take from this story:

1. People back then had it pretty awful. Good thing incomes are higher, technology is more advanced, and society has advanced to a point where we don't have to force the next generation to suffer needlessly.

2. Wow life sure was awful back then. We should force the next generation to suffer needlessly, because I can't stand the thought that the next generation be happier than me or have anything easier than I had it.

I guess it's really a matter of perspective which attitude you prefer to take. Personally, the former seems more inspiring to me rather than the latter. I would rather spread joy than misery.

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

Post by burt » Thu Jan 19, 2017 6:39 pm

CyclingDuo wrote:
Pajamas wrote:
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.
Just how overweight are they drinking that many calories per day? :shock:

It's usually coupled: spending is out of control, and consuming too many calories is out of control.

Drink black coffee. :sharebeer
I'm a Boomer and will go against the grain for Starbucks.
I'm thinking it isn't just the coffee but a place to socialize and interact with real people.
A place where you can actually sit across a table and look and talk to a real person v.s. social media.
I'm thinking if you are looking for a long time life partner, prospects at Starbucks are better than the club or bar.
Then again, maybe I'm just showing my age.

burt

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

Post by Rodc » Thu Jan 19, 2017 8:00 pm

Durzo wrote:http://economicalmillennial.com/numbers ... -is-17612/

I'm just gonna leave this here.

For those curious a new study by Robert Farrington (The College Investor) found the average networth of Americans 18-30 is $-17,612. It takes into account all assets and all liabilities.

Reminds me of the Louis CK skit on negative money. "Millenials need $17,612 just to be broke. They can't afford something even if it's free. How much does that cost? Oh, its free. Dang I can't afford free right now."
:)
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 » Thu Jan 19, 2017 8:01 pm

livesoft wrote:Not much in that article that didn't apply to 18-30 year-olds when I was that age and my parents before me. You are supposed to have a negative net worth durinng those years. So Millennials can look forward to the days when they become the Old Farts just like everybody else did.
Yes, that is the way it works!
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.

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

Post by livesoft » Fri Jan 20, 2017 6:43 pm

I thought this was interesting about student loans:
https://www.nytimes.com/2017/01/11/busi ... ising.html
Americans age 60 and older are the fastest-growing group of student loan borrowers, according to a new report from the Consumer Financial Protection Bureau that examines borrower complaints. There are now about 2.8 million Americans who are 60 or older with at least one student loan.
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blueblock
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Re: "Millennials may need to double how much they save for retirement"

Post by blueblock » Fri Jan 20, 2017 7:51 pm

At first, I was like, "Huh?! Who would go into debt to go back to school at age 60+?" But then:
Some older borrowers are carrying their own student loans, but most have education debt taken out on behalf of their children or grandchildren, either by borrowing the money themselves or co-signing loans with the student as the main borrower, the report found.
More evidence that many people in the US have not benefited from the growing economy and are resorting to workarounds that have the potential to hurt them even more than they're already hurting.

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

Post by Wildebeest » Fri Jan 20, 2017 8:23 pm

livesoft wrote:True story: The only time I hit the broad side of car while riding my bike was when I was riding uphill in the snow. I was passing an 18-wheeler which had slowed to make a right-turn. A car pulled out in front of the 18-wheeler and didn't see nor expect me, so BAM! right into the driver's door. I flipped over the car, but since I was well-clothed because it was so freaking cold, I didn't get hurt.
Any story which starts with "True story" better be good especially when there is no corroborating video.

My true story is that there was no uphill, because I could not have cycled up it. There was an inch of frozen rain and we cycled the 6 miles to school on ice.

The one thing I will be forever sorry for, is that we did not put our ice skates on to skate on county roads to school. But if we had, nobody would have believed us without the You tube video.

Alas I was born 40 years too early and when opportunity hit, did not have the sense to put my skates on.
The Golden Rule: One should treat others as one would like others to treat oneself.

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

Post by Maverick3320 » Fri Feb 10, 2017 11:19 am

Grt2bOutdoors wrote:
Da5id wrote:
Grt2bOutdoors wrote: Ask anyone if they would prefer prefer private sector employment to that of a public sector job that offers lower pay but better benefits. Let me know what the consensus is, I think you'll be surprised.
I personally am happy to take deferred compensation/more in 401k match/etc. But I assume companies aren't silly when designing compensation packages, and that they get better yield of employees with higher top line salaries. Kind of like how airlines have optimized for lowest cost on search engine rather than best overall experience. If it were the case that 401k plan quality was a big criteria for people looking for jobs, surely 401ks wouldn't be with such terrible providers...

I think the public sector gravy train is also going downhill, as the costs of generous pensions of the past have come due and are making government re-think pensions...
With the exception of those municipalities that are currently experiencing financing issues, I have not seen a widespread effort to slow the gravy train down in public sector, if anything there is a false sense of comfort and they are keeping the plans as status quo. Only when there is a raging fire do they bring out a 10 second ABC fire extinguisher which we know has little to no effect on quelling the issue. Moreover, the waiting line to get a job with public sector employment has never been longer, it's virtually impossible to get terminated from such a job.
The Federal government, the largest public employer in the country, switched from CSRS in 1987 to the new FERS as a cost-saving measure. Since then, there have been at least two increases in contributions to the federal pension that I'm aware of.

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

Post by willthrill81 » Fri Feb 10, 2017 11:22 am

Rainmaker41 wrote:I guess I'm not paranoid after all, since the market is out to get me. Is 25-30% the new 10-15%? If so, rather than being well prepared for retirement, I might only be tolerably prepared.

https://www.washingtonpost.com/news/get ... a7ea341a3a

http://time.com/money/4607398/why-mille ... omers-did/
Those that think a 4% gain is a "gloomy outlook" for equities probably shouldn't own them.

It gets worse though. Millennials may be the most risk averse generation since those that with through the Great Depression.

"The sample [Millennials] was fairly conservative in its choices: 15.3 percent selected the 100 percent guaranteed annuity, 65.3 percent selected the 75 percent guaranteed annuity, 16.1 percent selected the 25 percent guaranteed annuity, and 3.4% selected the 100 percent S&P stock fund."
(Larson et al. 2016, Journal of Marketing Theory and Practice, Vol 24, no. 1)
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Re: "Millennials may need to double how much they save for retirement"

Post by Maverick3320 » Fri Feb 10, 2017 1:47 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.
Perhaps this is the problem. Should 70% of high school students be going to college?

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

Post by randomguy » Fri Feb 10, 2017 2:09 pm

vitaflo wrote:I'm pretty sure 15% savings has always been the "recommendation" even if it's not always expressly said. Consider the SS wage base is $118,500. 15% of that is ~$18,000 or, the max you can put into a 401k per year. Also consider that at 15% savings rate, it takes ~43 years until FI. Given most people graduate college at 22, 43+22=65, or about the age most people consider retirement.

I've always felt that all of that was set up for a reason, mainly to adhere to a 15% savings rate. So I'm not sure much has changed at all (whether people follow this or not is another story of course).
basic math. Lets say you make 100k/years, get 4% real, wages just keep up with inflation and do that for the next 35 years. Where are we? 1.2 million dollars. Call that 50k/year. Throw in 20-30k of SS and you have more or less replaces your income (no need to save 15k/year and you are not paying 7k+ in payroll taxes). Save a bit less and you need to work 40 years. Save a bit more or get slightly better returns and you can drop the number down to 30 or so. For a person who doesn't really start saving til thier late 20s, you still get to retire in you mid 60s.

The higher savings rates are for the people that want to retire really early (upping it to 50% is great in that you only need to match say 40k of instead of 70k), paranoid about returns (i.e. you expect <4% for 30+ years and not just a decade), or who think things like SS are going to zero and medicare is going to be drastically more expensive. Obviously everyone of those things can happen. Expecting them all to happen though might be a stretch:)

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

Post by Maverick3320 » Fri Feb 10, 2017 2:17 pm

toto238 wrote:
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.
Couldn't the same be said of your contributions? You've taken the stance that student loans have become a problem - someone else's problem, by the looks of it - by providing a broad statistic. When people try to look into that statistic, you largely disregard their opinions. If you could break down your broad stat by telling us how many of these student loans are for legitimate schools, how many of these students worked through college, how many of these students have parents helping out with the loans, how many of the loans and what amount are for advanced degrees, etc that would be much more meaningful. Digging in deep and figuring out the where the problem truly lies is a much better way to make public policy and, if you'd like, where to assign blame.

As a millennial, I have a pretty wide circle of friends and peers around my age. My high-achieving (grad school+) friends/peers generally invest quite a bit, albeit generally with a financial advisor. My less achieving friends/peers really don't invest much at all. But yes, somehow they find 10 dollars a day for starbucks, or on the other end of the spectrum, for smoking a few packs a day (over 10 dollars). Many of them have new cars, and spent 33% of their disposable income on housing - which, in the US, is a lot of housing, especially compared to Western Europe and Asia. A lot of these people, particularly the ones that are making 30k-40k/yr and scoff at saving money, are the same people that turned their noses up at "dirty jobs" that pay a heck of a lot better. Who is truly to blame here? The evil student loan mafia? Rich people? The Other Side of the Political Spectrum? Or is it poor decision making on a large scale? From my point of view, Millennials just don't care much about investing - they are more about "experiences", and so have no problem taking a month-long trip to Vietnam (with the requisite 300 facebook pictures and updates) while having literally no retirement savings.

I can also say that of my peers/friends that went to college, working a job while in school was scorned, almost laughed at. A few actually worked 10-15 hours a week. I worked a job while also in ROTC, mainly so I could have spending money and put a few thousand away in Vanguard. I don't know anyone else that did that. I'm no genius, I just knew that some day I would retire and I thought it would be prudent to have some money saved up.

Last but not least, it's really difficult to conjure up a bunch of sympathy (and potentially foot the tax bill) for people that generally aren't making good financial decisions when the average person can spend 30 minutes online and become fairly well-educated in retirement investing. I just did a test: it took me 12 seconds to google "how much should I save for retirement". The top post came back with a 10-15% number, starting in the 20s. All the numbers are laid out for student loans when the student signs for them, are they not?

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

Post by willthrill81 » Fri Feb 10, 2017 3:27 pm

Maverick3320 wrote:
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%. That sounds about right, but it might be a little high.

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. It is, but the effect is not linear. Around half of all those who will eventually drop out of college do so in their first year, so those people tend to not have huge student loan debt. Seniors are quite unlikely to drop out.
Perhaps this is the problem. Should 70% of high school students be going to college? After having worked in the university system for over a decade, I can unequivocally say that the answer is no. At least half of the high school students going to college are simply not 'college material'. I do not say that to be elitist, but a person who can't mentally figure out what 10% of a number is and can't write a grammatically correct paragraph is not well served by going to a traditional university. Even though many of them will eventually complete a degree, the 'magic piece of paper', as I call it, known as a diploma is quickly found to not be the ticket to a cushy, high-paying desk job that many of them thought it would. I have a young family member who took seven years to get a degree in a largely useless field, and now he's delivering mail. Those were seven years of his life that were largely wasted, and now his gross annual income is about what he still owes in student loans. Much of the problem is that there is an increasing stigma associated with blue-collar jobs and not having a degree, even though many would be far better served by going that route.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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