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Comment by brianclements | Hacker News Reader

So many people live paycheck to paycheck that saving is just this intangible concept that "wealthier" people do. No one they know saves, no one taught them to save growing up, and even if they tried, they probably couldn't. Cost of living has outmatched wage growth; it's a mess.

On the personal responsibility side of it though, I'm willing to bet that over recent decades, another thing that has also inflated is many peoples "minimum standard of living". I've seen people who, for probably very cathartic reasons, will make very poor spending choices on food, electronics, gas guzzling cars and other things instead of plan for items that move their lives forward.

And the sad part is that everyones minimum standard of living SHOULD be going up, we all SHOULD be living better then our previous generation. But the actions of many in the governance tier of our society have chosen otherwise for us.

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Your perspective is one that I share, on the nature of class-based economics in a 'consumer' society such as the modern United States. I'm going to copy/paste a summary that I sent to a former co-worker (CFA Level 3, >$6B AUM) for his thoughts and he felt I did an okay job (made me feel smart).

So demographically, older workers have not saved enough for retirement. That drives them to maintain employment. With a lack of job opportunities (the slack), the youngest generations are presented a significant challenge – with amongst the highest debt levels and least job prospects, the youth cohort entering its first (or prime) earning years can be paired with another observed phenomenon, that of the wealth disparity. As a premise, poor people and young people spend aggressively, wealthy households invest and don’t spend proportionally to their means, and a significant number of older Americans have no retirement savings to speak of, and therefore cannot spend proportional to offset their declining economic contribution. Essentially, this is a perfect recipe to grind an economy to a halt: Wealthy people don’t spend, elderly workers don’t spend, poor people and young people love to spend but can’t without reasonable access to funding.

That covers pretty succinctly a big chunk of a very complex problem. Thanks for that.

Honestly with him as my audience I have to tone down any cause-effect blame / hostilities that I genuinely harbor, because those are different subjects (though I did infer the fact that only workers over 55 in the US have gained in employment since 2008). Just describing the problem in terms people can understand seemed a worthwhile experiment. As context, he's an Asset Manager and Financial Advisor for the public sector, so there's nobody more disappointed in the lack of quality rate bearing gilt-edged securities than him, figuratively speaking.

>, and even if they tried, they probably couldn't

For instance near as I can tell it takes like 10 grand to get into an index fund. Even if that didn't represent years of savings for most families there are so many things that 10 grand needs to be used for before [[2-5%/y return on investment over 20-30 year period IF the market doesn't crash shortly before you need to start drawing on it]] is a compelling proposition

$10k is the starting investment for the nicer classes of some mutual funds, but those are completely obsoleted by ETFs. You can buy those as soon as you have $50 for one share and brokerage fees.

https://www.betterment.com/ has a much lower minimum, but your point stands.

You can buy Vangard market index ETFs. VOO is their S&P500 ETF and BND is their bond ETF. Maintaining a 60/40 split of VOO/BND is hard to beat over long time frames. Substitute VYM for VOO for more cash flow at the expense of higher volatility.

The average standard of living is going up. Things get better all the time. Many people in debt have nicer cars than people did 20 years ago.

The sad thing is people choose to buy new cars rather than the perfectly functioning old ones and higher quality food. Or people without large families choose bigger houses rather than perfectly acceptable ones that two generations ago couples with 7 kids would fit in.

A very good standard of living in America can be had for well under $20k a year in family spending given smart decisions. The problem is people don't make those smart decisions. Maybe the government needs to step in - or maybe those people prefer their decisions to the ones other people think they should decide.

I chose healthcare and an eight year old car and $100+ in savings a month whereas my similar earning coworker chose a new car payment.

Also people spend lots and lots of money on alcohol I notice - and the % of that spending doesn't change much with income - they just buy higher priced drinks.

> Or people without large families choose bigger houses rather than perfectly acceptable ones that two generations ago couples with 7 kids would fit in.

I think about this myself. I have a house that's probably three times the size I need. But I bought it because it got me into a nicer neighborhood. All of the affordable, two-bedroom houses are always in really seedy neighborhoods where cars are always broken into, the cops are always being called out to, etc.

That's another great point, the more expensive house might not be because of size, but because of the strengthening bind between where you live and what that means for your chances at upward mobility.

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