this post was submitted on 06 Oct 2023
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Of all generational cohorts, older millennials are most likely to generate enough income to retire comfortably, according to the latest Vanguard Retirement Readiness report.

Specifically, millennials aged 37-41 have the greatest chance of landing a comfortable retirement.

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[–] worldwidewave@lemmy.world 67 points 1 year ago* (last edited 1 year ago) (2 children)

Vanguard assesses retirement readiness assuming your post-employment income should match around 68% of your annual salary.

Millennials in the 70th percentile of earners are the only demographic on track to come anywhere close to that coveted ratio. Early millennials are expected to hit 66% of their annual salary at retirement, while Gen X lags at 53% and late baby boomers at 51%.

Yay, wealthier Millennials? Way to grind that 401K

[–] stolid_agnostic@lemmy.ml 39 points 1 year ago (2 children)

That was my take away. If you earn a lot of money you can fund a good retirement.

The only other real argument I found was that millennials in general may be better off because they entered the workplace when these retirement plans activate automatically whereas boomers and gen x had to actively sign up for them.

[–] agitatedpotato@lemmy.dbzer0.com 7 points 1 year ago* (last edited 1 year ago) (3 children)

Your retirement plan activated automatically?

[–] scytale@lemm.ee 15 points 1 year ago (2 children)

I think what they meant was 401k enrollment is now included in new employee onboarding by default in most places now.

[–] WalrusDragonOnABike@kbin.social 5 points 1 year ago* (last edited 1 year ago) (1 children)

You can be an employee at places still? /j

[–] SnipingNinja@slrpnk.net 2 points 1 year ago

It's a good question for all the contractors

[–] agitatedpotato@lemmy.dbzer0.com 2 points 1 year ago (1 children)

Ive still never had that, Im over 30 and the only retirement account I have I made myself outside of work.

[–] BarrelAgedBoredom@lemm.ee 9 points 1 year ago (3 children)

My employers 401k plan was automatic. Let it sit for 3 years and came on hard times around 2021. I actually lost ~15% of the money I put in. Cashed it out, opted out of automatic contributions and haven't looked back. I don't need some investment firm to lose my money for me, I'm already good at that on my own lol

[–] AA5B@lemmy.world 3 points 1 year ago (1 children)

Please revisit. That’s usually a bad idea. Yes, aggressive investments can lose money in short terms like one year or less - actually there was a long term piece of advice to not invest in stocks any money you need for the next five years. However prudent investments, like an SP500 index fund , have always increased in value in like ten year periods, and over some similar period have always beaten inflation

There’s a lot to learn about investments, but

  • it’s your only realistic path to fund retirement
  • the magic of compounding is your best friend
  • 401k contributions and returns are tax deferred until retirement
  • many 401ks have additional corporate contributions - free money

401k’s can be VERY useful to most of us over the long term, so you should reconsider whether it’s good for your situation too

[–] BarrelAgedBoredom@lemm.ee 3 points 1 year ago

If I had the funds to invest, I would probably have a Roth IRA or something simple but the hard times never let up. I work 60 hour weeks and still live paycheck to paycheck. I've only earned enough in the last couple of months for me to get health insurance again. I can't afford to give even 3% of my paycheck away (the minimum for my company to begin matching) at the moment and that's not likely to change in the next year or two.

I really do appreciate the concern and if I were in a different place, I'd reconsider. I was being a bit bitter and sarcastic in my comment but I'm in no.position to save any money

[–] capital@lemmy.world 2 points 1 year ago* (last edited 1 year ago) (1 children)

You sold when it was 15% down? And outside of retirement?

For the love of god, don’t touch your retirement savings. Consider reading this series:

https://jlcollinsnh.com/stock-series/

[–] BarrelAgedBoredom@lemm.ee 2 points 1 year ago (2 children)

I needed what little was in that account because my car shit the bed on me and the repairs were more than the car was worth. Had to take that and my stimulus check to buy another beater. I'm still paycheck to paycheck and couldn't afford to start my savings back up if I wanted to

[–] MeanEYE@lemmy.world 2 points 1 year ago

Let me guess, you are in USA? Only there you'd be so car-dependent.

[–] capital@lemmy.world 2 points 1 year ago (1 children)

I see. I’m sorry about your situation.

[–] BarrelAgedBoredom@lemm.ee 3 points 1 year ago (1 children)

All good! I appreciate the advice, genuinely

[–] afraid_of_zombies@lemmy.world 1 points 1 year ago (1 children)

You don't trust the pieces of shit my taxdollars bailed out in 2009? Why don't you trust those peices of fucking shit?

[–] capital@lemmy.world 1 points 1 year ago (1 children)

Staying out of the stock market will ensure you won’t have enough to retire on.

[–] afraid_of_zombies@lemmy.world -1 points 1 year ago (1 children)
[–] capital@lemmy.world 0 points 1 year ago

Oof. By the time you learn you were wrong, it’ll be too late.

[–] stolid_agnostic@lemmy.ml 1 points 1 year ago* (last edited 1 year ago) (1 children)

Actually it's required if you're over the age of 30. Below that age, you can delay it. Once you hit 50, the percentage input increases significantly. I work as a state employee so it's different than in private sector.

I think that even corporations are just enrolling people though too.

[–] WalrusDragonOnABike@kbin.social 3 points 1 year ago (3 children)

Weird to determine retirement spending based on annual income instead of annual spending. Like, if someone is only spending 40% of their income now, why would they assume they are going to increase their spending by 65% when they retire? Or otoh, if someone is spending 95-110% of their income now and that's mostly housing and food, why would they only need 68% when they retire (especially if they're accumulating debt)? I'm sure its mostly a result of that data being a lot easier to get and may be using assumptions about how many years someone is working and assumed savings rate required to get that amount of money (heuristics like if you have a constant inflation-adjusted income and save 30%, it takes about 30 years to save enough to retire)?

70th percentile is only ~$120K/year. A lot more than I make, but not exactly what I'd be using "wealthier" to describe, even if just as a comparative. Even at like 90th percentile (~220K/year) would still just be in the "well off" category in my mind.

[–] drphungky@lemmy.world 4 points 1 year ago

You're getting at my favorite article of all time, The Shockingly Simple Math of Early Retirement. Say what you will about Mr. Money Mustache or even early retirement in general, but this article really is the absolute simplest and best way to think about retirement savings. It's why I often feel poor or pressed for money but never worry about retirement, because I max it all and pay myself first, and I know as long as my percentage is high I'm on track.

Plus even before I could max my 401k and Roth (and we recently had a kiddo so had to stop Roth for a bit) or get a high savings rate, I put in way more than was comfortable because the power of compounding is worth rice and beans and not going out drinking for a bit. Now that I'm middle aged my nest egg is huge, and we've been slowly able to lifestyle inflate. But I am soooo glad my younger self saved like crazy. Time flies by, and money compounds before you know it.

[–] bluGill@kbin.social 0 points 1 year ago

People tend to spend what they earn. I have to be careful not to spend more than my paycheck every month. I know people who make less than half what I do who still do okay in life - they don't have as nice a house or as many toys, but they have food on the table and a warm roof. I know from experience that I could cut how much I spend every month by a lot - I just don't want to cut those extras from my life.

Many people are working long hours now saving for retirement when they plan to travel, and thus they think their spending will be more in the future. I know some who did that for years, and got cancer and died before their planned retirement age. I know others who have been traveling the world carefree for a couple decades after retiring.