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Why do you feel sorry for the millennials? Unemployment is really low. When I was a young man starting to look for jobs, the unemployment rate in my area was 25%. Uncle Sam also took two years of my life. No one is currently being drafted. More and more great jobs are opening up as the boomers retire. There are countless career areas when labor shortages are predicted to become acute.
As a young guy under 30, I agree. We are much luckier than your generation. Of course it varies, but we are
Not screwed.
I looked at the actual study the article is referencing. It does say this:
"Another way to illustrate how different the financial lives of families are at different stages in their life cycles is to calculate the odds of having at least $1 million in net worth. In 1989, the odds of a family headed by someone under 40 having $1 million of wealth or more were about 1 in 51. By 2013, the odds had lengthened slightly to 1 in 55. Among middle-aged families, 1 in 12 had at least $1 million in 1989 and 1 in 9 had that much wealth in 2013.
Among old families, 1 in 11 was a millionaire in 1989 but 1 in 7 old families had at least $1 million in 2013.
In other words, typical wealth differences between young and old families were large in 1989 and had increased notably by 2013."
An old family was defined as one headed by 62 (ouch! That's my family!). They studied 40,000 who participated in surveys over a number of years. It wasn't clear who these people were or how they were chosen. But it seems like they had 10,000+ people over 62 and 1 in 7 had a million or more. That's what I am not getting because other studies don't say that 1 out of 7 people have that much money.
Millenials really are at a disadvantage for their future financial security. No question about it. But what I didn't understand was this paragraph:
"If you’re over 62, your odds of having at least $1 million in net wealth (your total assets minus your total debt) are relatively achievable -- about 1 in 7. But if you are under 40, your odds are low: 1 in 55.
In the last 25 years, the odds that an old person is a millionaire have improved slightly. But for young people, they have gotten much worse."
So---I'm not following. Are they saying that 1 out of 7 people over 62 are millionaires????I've never seen anything close to this statistic before. I've seen some stats that say the average net worth of people over 65 is $690,000---but that's the average, the mean, so billionaires skew it up. The median is $190,000. If the odds are 1 in 7, wouldn't more people be millionaires? And again, so sorry for millenials---it's tough for them.
What are the odds of becoming a millionaire? Pretty good. Just borrow a dollar from a million people and forget to pay them back.
Let's see...if you successfully "borrowed" one-hundred dollars extra from 100 random people (or 50 cents from 200 people, 25 cents from 400 people, a dime from a thousand people, or a penny from ten thousand people) every day for thirty years, you would have a million dollars. Good luck making that much by panhandling, though. In some cities it's banned completely. I don't know. You might be able to get a cardboard sign out after work that reads "millennial retirement fund..." Who knows? They might donate.
Also, if you make at least 2,500 per month, if you could somehow put all of that in savings, you would end up with a million bucks in about thirty years. Your chances would be even better if you could put it into CDs, bonds, or an IRA. Looks like those of us who want to retire someday should keep our expenses near zero...or learn to love pennies!
Anyone can become a millionaire with time. I tell my kids all you need to do is invest $2,000 a year from the time they are 18 or so and do that for the next 6 years. They can choose to keep investing or quit. Then let that money ride. Do not borrow on it, do not sell off the shares, just let it ride. It does not even matter if it is in a IRA or a 401K, just let time do its thing. When they retire at age 65 they will have become worth over $1million.
For someone that saves just $2,000 a year from age 20 and does that for 6 years, letting it build will make it. But get this, for someone that waits to invest untill they are 26, they will need to save the same $2,000 a year until they hit age 65 to make up the lost time that the money could have grown.
The best situation would be to start at age 20 or 18 if you can and never stop investing that $2,000 amount. You would have over $2,500,000 by the time you hit 65.
Agreed.
Just an example. $2000 per year invested over the last 20 years in in a moderately boring balanced fund like Vanguard Wellington would now be worth over 125K
But that's my point---why wouldn't the people who are millionaires be more in line with what they say the odds of being a millionaire are? That people over 62 had a certain amount of earnings and had they saved/invested, they could have been millionaires...but they didn't, so they are not?
In addition to earnings and savings I think they're counting the value of property older people may own. Odds are it appreciated greatly in their lifetime — far more than it will be expected to appreciate for millennials. When my mother sold the house she had lived in for 50 years, she got four times the price she had paid, in a low-income area. Much is due to the dollar being worth less, but if we're only counting who is "technically" a millionaire, an old person who has held on to property for decades has a greater chance at it than someone who was, and probably will continue to be, "house poor" for decades.
Why do you feel sorry for the millennials? Unemployment is really low. When I was a young man starting to look for jobs, the unemployment rate in my area was 25%. Uncle Sam also took two years of my life. No one is currently being drafted. More and more great jobs are opening up as the boomers retire. There are countless career areas when labor shortages are predicted to become acute.
What planet are you on? Unemployment is extremely HIGH. The government is doing everything it can to make sure that foreigners get the existing jobs instead of Americans.
There are ZERO areas where labor shortages are predicted.
Millenials really are at a disadvantage for their future financial security. No question about it. But what I didn't understand was this paragraph:
"If you’re over 62, your odds of having at least $1 million in net wealth (your total assets minus your total debt) are relatively achievable -- about 1 in 7. But if you are under 40, your odds are low: 1 in 55.
In the last 25 years, the odds that an old person is a millionaire have improved slightly. But for young people, they have gotten much worse."
So---I'm not following. Are they saying that 1 out of 7 people over 62 are millionaires????I've never seen anything close to this statistic before. I've seen some stats that say the average net worth of people over 65 is $690,000---but that's the average, the mean, so billionaires skew it up. The median is $190,000. If the odds are 1 in 7, wouldn't more people be millionaires? And again, so sorry for millenials---it's tough for them.
That's correct - at least 7% of 62 year olds and older are millionaire households. The lower number ($690,000) is the mean, not the 7th percentile!
$1 million is not a lot of money. At the usual 4% withdrawal rate, it produces $40,000 a year in income in retirement.
The WP article could not be more wrong. Almost all millennials will be "nominal" millionaires, that is, they'll have $1 million in assets during their lifetimes. The problem is that after 40 more years of 2% inflation, $1 million will be worth $452,000 in today's money, which is basically beer money if you have to retire on it with no other source of income. But the millennials whom I know are saving and investing like crazy, making the founders of Wealthfront and Betterment rich, and making themselves…well…rich someday.
5k 30 years ago takes 15k today and we had falling inflation for most of that time frame as well as healthcare was not escalating that fast for most of it . .
i retired on friday and with multiple 7 figures to support us here in nyc (queens , not manhattan ) we had to set up a separate account for the years spending as it is that easy to go over budget with so much to do .
i can't help but go gee i wish i saved more as we could easily spend through whatever amount we had just adding more wants and things from our wish list .
depending where you live and how you want to live having 1 million even now could be very easily way to little . our rent in a rent stabilized apartment , health insurance and long term care insurance are 36k by themselves and my wife is starting medicare today . that is after tax dollars too .
Last edited by mathjak107; 08-01-2015 at 04:35 AM..
That's correct - at least 7% of 62 year olds and older are millionaire households. The lower number ($690,000) is the mean, not the 7th percentile!
But isn't 1 out of 7 more like 14%? I HAVE seen figures of 4 to 6 % of Americans being millionaires---that is the entire population of all ages, so maybe it follows that twice as many poeople over 62 would be since they have had more time to earn/save/invest.
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