Some Millennials and Gen Z don't see the point in saving for the future
businessinsider.com
businessinsider.com
That's horrible logic. When the market is down is the perfect time to invest, if you expect things to "return to normal": you're basically getting things at a discount. Buy low, sell high(er).
(Also don't try to time the market, but baby steps.)
Considering the youngest millennials are in their late 20s, and the majority of us are in our 30s. There are a good amount of us that moved up in our career paths and bought a home. Considering most buy a home in their 30s-40s, that is where more millennials already sit. What currently sucks is us younger millennials are not enjoying the cheap mortgages the older millennials are enjoying.
What really sucks is you pretty much need two incomes to make it work. You can easily get a job making 50k a year no problem. But that doesn't give you much these days. I make 80k and if it wasn't for my partner I would be paycheck to paycheck, and with kids out combine paycheck is still paycheck to paycheck. 110k doesnt do the trick. You pretty much need a household income of 150k to start having a okay life.
So while a mortgage vs rent may be pretty close ATM if you are new home buyer (Yeah I wish I was able to buy a home 10 years ago..), your mortgage is putting money into your home as a savings account. And if you ever need some of that money for whatever reason, you refinance. It is real nice and easy
How?
That's only the case when investments would lose money. Otherwise your rate of return offsets your inflationary losses.
(Right? Disclaimer: I have a 401k but otherwise don't know a ton about investing.)
Right, but you're losing 8.4% instead of 9%.
(And hopefully you're investing the cash more wisely than a savings account!)
Compound interest works in reverse as well. Losing "only" 8.4% of your wealth each year means in 8 years more than 1/2 your wealth is gone. Thus, saving is basically irrelevant. By the time you'd have saved enough money to be meaningful, it is not worth anything.
The average rate of return for a 401k is around 5% - 8% yearly. So in this scenario, you'd be losing 1% - 4% yearly.
$10,000 initial investment after 10 years:
-1% -> $9,048.00
-4 -> $6,698.72
-8.4 -> $4,304.37
From the article:
In fact, a Fidelity retirement planning survey of about 2,600 adults found that 45% of "next gen" — defined as 18 to 35-year-olds — "don't see a point in saving until things return to normal."
Assume net $40,000 income per year and an investment of $500 per month at a 5% rate of return. Assume the person is 22 (just out of college) and retires at 65.
Their retirement account would be worth around $900,000 at retirement.
I understand the fatalistic attitude, but it would be smart to hedge one's bets.
You are not at a loss if you don't sell....
Any buying in a down market is ALWAYS better for a younger generation.
S&P500 still has a 10y avg of 11-12%, that means every year that is the avg return. Even if there was 2-3 bad years, the 7-8 good years make up for it... So in 30 years time, it doesn't mater if we had a few bad years of -20% declines. You are still up massively.
Young people have such a lack of understanding when it comes to the stock market and it shows.
If your 401k only avg %5 return per year over a 30y span, you picked the wrong investment methods. Too much in bonds..
Still you should be taking advantage of employer match. Pretty much every employer has a 401k program, use it. SS will be there, but you don't want that to be your life line. Sadly Gen X didn't really understand 401ks, they got them later in life and many didn't fund them correctly. It isn't uncommon to see genXers take money from the 401k later in life with a hit, and it will be on their family to take care of them when SS isn't enough.
Sure it is.
Yep, I agree with your investment advice.
The article is about retirement and how some generations aren't saving for it. How, then, are you going to use that purchasing power today to help yourself in 40 years, with the caveat that you can't save that money for retirement?
I have plenty of savings, but I never expect to be able to retire. There is simply no way I could ever have enough savings for it to amount to anything. The last time I did the math was pre-COVID and I estimated I'd need no less than $4 million to retire.
Unless you count working until I am physically unable to work any longer, then living a very meager existence for a few short years and dying. That I fully expect.
(I'm using hand-wavy math here.)
During the good decades after WWII our society relied too heavily on growth and became totally atomized. You need money for things that you used to get just by being a member in good standing with your community or by having a large family. When the economy stops growing local communities will take time to heal to the point where e.g. the elderly are cared for by default. I will most likely fall into the in between period when there are no options so early death would be the most humane option.
The thought of going from an upper middle class person on easy street to an impoverished lonely old lady is just too painful and I have zero faith in the United States and probably the world in general to not go down the tube to the point where all my investments become worthless. I'll keep hedging my bets of course but... the exit bag is the only sure thing lol.