Majority of Millennials have nothing for retirement

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Majority of Millennials have nothing for retirement

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CNN Money
66% of Millennials have nothing saved for retirement
By Katie Lobosco March 7, 2018: 10:14 AM ET
Most Millennials are not on track when it comes to saving for retirement.

That's no surprise. After paying bills, rent and making student loan payments, there's often not much leftover each month for young people, many of whom entered the workforce at a time of stagnant wages and high unemployment.

But a new report shows just how far off track they might be. About 66% of people between the ages of 21 and 32 have absolutely nothing saved for retirement, according to the National Institute on Retirement Security. The report is based on Census data collected in 2014.


"I see in practice that a lot of us are putting retirement down the goal priority list, in favor of paying off student debt or buying homes," said Douglas Boneparth, a certified financial planner and author of The Millennial Money Fix.

Waiting to save could significantly delay retirement. You'll be missing out on valuable years of compounding returns.

Related: Millennials may look financially healthy, but...

Many people aren't overspending or living a frivolous lifestyle, yet still can't afford to put money toward all their competing priorities.

For those people, Boneparth finds "nothing wrong" with not saving for retirement as long as they're honest with themselves about what their financial goals are.

"I know it will delay your ability to achieve financial independence," he said. "But how are you going to tell someone who has a child that saving in a 401(k) is more important than their immediate needs?"

Most experts don't expect Millennials to be living the same kind of lifestyle in retirement as their grandparents. They may have to work longer to supplement their savings.

Related: What Millennials really want at work

But not all 83 million Millennials are behind.

About one-third are saving for retirement. Most have less than $20,000 but some have much more. The average account balance is $67,891, according to the report.

If they are saving, it's likely their employer offers a retirement plan, like a 401(k). More than 94% of Millennials who are eligible for a workplace retirement plan are saving. That's about the same participation rate as older generations.

But Millennial workers in particular often find they don't meet the eligibility requirements for a 401(k) even if their employer offers one. Sometimes they don't work enough hours, or employers require them to work for a certain amount of time before they qualify.

About 25% of Millennials said they were not eligible to participate in an employer-sponsored retirement plan because of their part-time status.

Loosening these eligibility qualifications would increase the number of Millennials saving for retirement, the report said.

Of course, people can save for retirement without an employer sponsored plan. Most people are eligible for Traditional or Roth IRAs, which also offer tax benefits for retirement savings.
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Re: Majority of Millennials have nothing for retirement

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Re: Majority of Millennials have nothing for retirement

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Most I know in the "millenial" category just assume that they'll never retire anyway.
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Re: Majority of Millennials have nothing for retirement

Post by Soontir C'boath »

I was definitely one of those who focused on getting rid of debt first. I was paying probably around three grand in interest fees annually for several years. So as far as I was concerned, every dollar I could put into my credit cards and student loan mattered more than a retirement account I wasn't going to see til I was old and senile, and that was if I was expecting to live that long anyway. Plus, I wanted to build up my savings account in case I had an emergency. I am at the ripe old age of 31 without an IRA. but will apply to my company's retirement plan this year since I've cleared my other financial hurdles. So I'll certainly see in a few decades how pissed off I will be at my young self.
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Re: Majority of Millennials have nothing for retirement

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Soontir C'boath wrote: 2018-03-07 11:52pm I was definitely one of those who focused on getting rid of debt first. I was paying probably around three grand in interest fees annually for several years. So as far as I was concerned, every dollar I could put into my credit cards and student loan mattered more than a retirement account I wasn't going to see til I was old and senile, and that was if I was expecting to live that long anyway. Plus, I wanted to build up my savings account in case I had an emergency. I am at the ripe old age of 31 without an IRA. but will apply to my company's retirement plan this year since I've cleared my other financial hurdles. So I'll certainly see in a few decades how pissed off I will be at my young self.
1. Is this the case in America where your employer doesn't automatically put some of your pay into a retirement fund like in Australia
2. It would still be the right decision to get rid of credit card debt, especially when they charge high interest rates.
3. 61 percent of Americans don't have enough savings to cover a $1000 emergency, so you aren't alone.
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Re: Majority of Millennials have nothing for retirement

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Honestly, I'm not entirely sure how new this is. What fraction of the baby boomers actually had meaningful retirement savings in, say, the 1970s? It may not have been 66%, but I doubt it was a tiny number. I'm sure more of them had savings in general, but I suspect that in most cases those savings were oriented around general purpose 'rainy day funds.'

Insofar as retirement savings seem more normative, it's because the country has been getting grayer and the narrative supports "[Average Citizen] should have retirement savings!"
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Re: Majority of Millennials have nothing for retirement

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Simon_Jester wrote: 2018-03-08 07:16am Honestly, I'm not entirely sure how new this is. What fraction of the baby boomers actually had meaningful retirement savings in, say, the 1970s? It may not have been 66%, but I doubt it was a tiny number. I'm sure more of them had savings in general, but I suspect that in most cases those savings were oriented around general purpose 'rainy day funds.'
I don't know about the US systems but in the UK final salary pensions garenteeing a retirement income equal to a proportion of your salary at retirement were fairly standard for most large employers in that time period. From the employee's point of view they're not actually paying anything into the scheme it's directly from the wages.
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Re: Majority of Millennials have nothing for retirement

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To be fair, that is a good point; the US had a similar system for most large corporations back in those days as well.
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Re: Majority of Millennials have nothing for retirement

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Gandalf wrote: 2018-03-07 11:41pm Most I know in the "millenial" category just assume that they'll never retire anyway.
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Re: Majority of Millennials have nothing for retirement

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I wouldn't be too surprised. We are too qualified yet underpaid, some have no jobs. Oh geez, I doubt I even wanna raise a family because of my debt :(
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Re: Majority of Millennials have nothing for retirement

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Gandalf wrote: 2018-03-07 11:41pm Most I know in the "millenial" category just assume that they'll never retire anyway.
Yup. I've long reconciled the fact that I'll probably die at work. Murrica.
Bedlam wrote: 2018-03-08 01:56pm
I don't know about the US systems but in the UK final salary pensions garenteeing a retirement income equal to a proportion of your salary at retirement were fairly standard for most large employers in that time period. From the employee's point of view they're not actually paying anything into the scheme it's directly from the wages.
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Re: Majority of Millennials have nothing for retirement

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Bedlam wrote: 2018-03-08 01:56pm
Simon_Jester wrote: 2018-03-08 07:16am Honestly, I'm not entirely sure how new this is. What fraction of the baby boomers actually had meaningful retirement savings in, say, the 1970s? It may not have been 66%, but I doubt it was a tiny number. I'm sure more of them had savings in general, but I suspect that in most cases those savings were oriented around general purpose 'rainy day funds.'
I don't know about the US systems but in the UK final salary pensions garenteeing a retirement income equal to a proportion of your salary at retirement were fairly standard for most large employers in that time period. From the employee's point of view they're not actually paying anything into the scheme it's directly from the wages.
I'm probably in the last generation to get pensions - and even at that, I'm a bit unusual for my peers in getting one at all. I'm either just past or on the tail end of the boomers, depending on how you define that group. So yes, pensions were still a thing in the 1970's but disappeared rapidly during the 1980's with the rise of the 401(k) and IRA's.
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Re: Majority of Millennials have nothing for retirement

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Social Security is not going to exist by the time I would retire in the first place. Second, pensions have gone the way of the dodo while corporations are using that 'bailout' money to give their heads more 'bonuses.' So no, retirement is not going to be an option with the current system.
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Re: Majority of Millennials have nothing for retirement

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mr friendly guy wrote: 2018-03-08 03:58am1. Is this the case in America where your employer doesn't automatically put some of your pay into a retirement fund like in Australia.
Some employers in the US do something like this, but it's not even remotely universal. It's mostly seen in businesses that used specialized skilled labor, since the work requirements mean they can't afford to have high employee turnover, and offering a lot of benefits (of which health insurance and retirement accounts are the two most common) makes it easier to attract and retain workers.

In the jobs I've had, the way it's usually worked is that each employee has their own account set up (usually a simple IRA), and they can choose to automatically have a certain percentage of their paycheck put into the account, with the employer offering to match a certain amount. The onus is on the employee to set the money aside, with the employer matching a certain percentage as a way of encouraging them to do so.

Personally, I'm probably going to be the rare millennial that will have enough saved for retirement, but that's mostly because my circumstances have allowed me to save.
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Re: Majority of Millennials have nothing for retirement

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At the same time, I'm not sure the current system is going to be tenable or still in existence at the point where I'd be retiring (i.e. 35-40 years from now). The status quo is in large part a function of, as Laan said, idiotfuckingboomers. Ones whose perception of how the social order is supposed to work is wildly at odds with what the rich/elite slice of their own demographic has done to the social order.

The median age of American voters is somewhere between 45 and 50. Right now that means that a comfortable majority of voters were born before 1973. When it comes to being one of Generation College Debt, they... just Don't Know What It's Like, Man.

In 2035, that median voter will have been born around 1985 or so- my age. Generation College Debt (and Generation College Debt Junior, which is to say the people born after 2000) are going to be somewhere close to half the electorate, more if they're more politically active than millenials historically have been over the past ten years or so.

And that's still significantly before I'm likely to retire.

Watch this space for changes, in other words.
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Re: Majority of Millennials have nothing for retirement

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mr friendly guy wrote: 2018-03-08 03:58am1. Is this the case in America where your employer doesn't automatically put some of your pay into a retirement fund like in Australia
Employers here are not legally required to offer any sort of 401(K)/pension/whatever plans. So, most don't. America is an excellent example of how corporations will behave if you don't force them to be decent.
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Re: Majority of Millennials have nothing for retirement

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Napoleon the Clown wrote: 2018-03-09 05:05pm
mr friendly guy wrote: 2018-03-08 03:58am1. Is this the case in America where your employer doesn't automatically put some of your pay into a retirement fund like in Australia
Employers here are not legally required to offer any sort of 401(K)/pension/whatever plans. So, most don't. America is an excellent example of how corporations will behave if you don't force them to be decent.
I'd adjust that a bit. Most *large* corporations, i.e. companies that cover more than one state at least, do tend to have a 401K as an *option*. How available it is may vary-- for example they may not bother offering it to part time employees or employees with less than a certain amount of service time. Even when I worked part time at Taco Bell though I had the option of putting money into one. I currently have the option at Home Depot. Both are large corporate entities, though.

Generally though the notion is that if an employee goes full time and decides to make a career of working at that company, then that employee should have the option of saving for retirement. I think that's still stuck even with the vanishing of the classic pension system. Particularly with the number of baby-boomers still in the workforce but closing on to retirement, this is going to stay in the public eye because people are going to be thinking and talking about this. Perhaps in thirty years or so after all the baby boomers are retired and the millennials-- a generation which did -not- grow up with the idea of pensions-- are starting to eye retirement, then you'll see a true vanishing of the employer-contributing 401K.
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Re: Majority of Millennials have nothing for retirement

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On the other hand, by the time the millenials are starting to think about retirement seriously, you're going to see a "HOLY CRAP GODDAMMIT" reaction from a demographic that will then be the median-age voters in America, and whose children (in the same boat) are the youth voters, and whose immediate forebears (the Gen-X types) aren't getting any too good a deal out of the status quo for retirement either.

Which is why I say, "watch this space."

The dismantling of the current system is only tenable so long as the general public is willing to put up with it. It looks bad, but it's going to take one hell of a lot of fast-talking and manipulation and suppression to keep the system this broken once the people the current system consigns to be dropped into the volcano at end-of-usable-life start to smell the ash and fumes.

The real thing that worries/bothers me is the "hollow generation" effect created by the way the present economy seems to be forcing many millenials to defer having, or not have, children. Because that isn't something that can be fixed by passing a bill ten years from now, whereas the retirement crisis faced by people who don't retire until the 2040s... is.
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Re: Majority of Millennials have nothing for retirement

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Napoleon the Clown wrote: 2018-03-09 05:05pm
mr friendly guy wrote: 2018-03-08 03:58am1. Is this the case in America where your employer doesn't automatically put some of your pay into a retirement fund like in Australia
Employers here are not legally required to offer any sort of 401(K)/pension/whatever plans. So, most don't. America is an excellent example of how corporations will behave if you don't force them to be decent.
That utterly sucks. When I graduated and got a full time job when I was 23, my employer was already putting super contributions. When I changed employers they were obligated to put money into my superannuation (retirement fund) and I had the choice to choosing one for them.

Even then we still have problems. I found a PDF documenting superannuation (few years out of date) and it says the following.
Superannuation balances of younger Australians
For individuals 30 to 34 years of age in 2013/2014 average balances were around $36,400 for
men and $25,550 for women. These are well up on the average balances of $20,000 for men
and $14,000 for women two years earlier.

Superannuation balances at retirement
With average superannuation balances at the time of retirement (assumed to be between
60 to 64 years of age) in 2013/2014 of $292,500 for men and $138,150 for women, many
recent retirees will need to substantially rely on the Age Pension in their retirement.
So having just under $300 K won't be enough for men and will have to rely on the age pension. Funny thing is, I don't think millenials would like paying for the Boomers who have made the economic situation the way it is now (ie you need two incomes to buy a property instead of one).

https://www.superguide.com.au/boost-you ... per-need#1

These give a nice idea of how much one needs to retire at, and for a couple of have an income of $47 k you need about 1.25 million in the bank. Long story short, Boomers aren't going to have enough to retire on, and the younger generation are paying for their pension, when they were the ones at the helm when the economic system became what it is making it harder for younger people.
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Re: Majority of Millennials have nothing for retirement

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I had a retirement. Then Martin died and I had to spend it all on surviving.
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Re: Majority of Millennials have nothing for retirement

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I'm sorry.
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Re: Majority of Millennials have nothing for retirement

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Simon_Jester wrote: 2018-03-10 07:02pm I'm sorry.
Had to pay bills. Nothing to be done. When I read 60, I can tap into my WV State Retirement, it's still there even though I don't work for them anymore.
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Re: Majority of Millennials have nothing for retirement

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Simon_Jester wrote: 2018-03-09 07:41pmThe real thing that worries/bothers me is the "hollow generation" effect created by the way the present economy seems to be forcing many millenials to defer having, or not have, children. Because that isn't something that can be fixed by passing a bill ten years from now, whereas the retirement crisis faced by people who don't retire until the 2040s... is.
Maybe then devise a technological solution and breed humans? Replicants? :lol: After all, the current brand of techno-optimism treats every problem as a technical one. You could have Musk being the magnate of human farms.
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Re: Majority of Millennials have nothing for retirement

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K. A. Pital wrote: 2018-03-11 05:18amMaybe then devise a technological solution and breed humans? Replicants? :lol: After all, the current brand of techno-optimism treats every problem as a technical one. You could have Musk being the magnate of human farms.
Don't give him ideas.

Mind you, we're probably going to have to deal with a major structural unemployment problem created by technological advances long before we have to worry about what millenials are going to do once they have to retire.
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Re: Majority of Millennials have nothing for retirement

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Soontir C'boath wrote: 2018-03-07 11:52pm I was definitely one of those who focused on getting rid of debt first. I was paying probably around three grand in interest fees annually for several years.
You're not wrong. Paying off debt is the highest possible return on investment, paying into retirement funds is second to that.
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