I guess I'm in the oldest cohort of millennials: I'm 37 and I'm not even out of school yet...
Articles like the one you posted, James, raise my hackles. They're predicated on several unexamined assumptions that I believe are very harmful, both to individuals and our larger society (and the global ecosystem, but that's a whole other story).
I'm planning to work full-time long enough to get my PE, then cut way back to maybe 20-30 hours/week. I don't think I've ever earned more than $25,000 in a year, and I've lived pretty comfortably on about $15,000/year. So retirement doesn't seem terribly unattainable to me. I don't have a solid plan about what age I'll try to retire from engineering completely, though. Maybe never. Maybe when I'm 45.
I do think I'll supplement my income. Maybe more importantly, though, I try to use my time and money in ways that reduce my expenses now and in the future. To a lot of folks, this maybe looks like privation, but I find that it actually makes my life much better. a few examples: planting fruit and nut trees (my preferred investment), no car (AAA: average cost to own and operate a car is over $9000/year and rising), small home (less to clean), constantly trying to reduce utility costs (ditch the clothes dryer, collect rainwater, recycle greywater, invest in wool, heat pump water heater, &c), forgoing consumer electronics (does that expensive pocket computer and monthly bill really improve your life?), foraging/catching wild food (mushrooms, fish, shellfish) and so on. I also spend a whole lot of time with friends. Mostly we're just hanging around eating and drinking delicious things at somebody's house. Sometimes we're helping each other with building or other projects. These are things that a lot of folks would reflexively pay somebody else to take care of for them, but they're really missing out. Having a strong social network (not an electronic one) is so important for quality of life, especially as we get older. and trading help is much more rewarding than trading bar tabs (you can still make fancy cocktails at home, if fancy cocktails float your boat).
I may also try to buy a couple vacant lots in my small hometown and build some little houses on them. My town is very much lacking in rental housing that is both affordable and nice, which is a niche I would like to help fill. That will be beneficial to a town that's important to me, and provide a little bit of income in my dotage.
I don't save 15% of my income right now, because I don't have any real income to speak of. Once I'm actually employed, though, 15% seems pretty easy. I would also like to be entirely out of debt within ten years, which feels doable.
My student debt is on the low end, and I've been slowly paying it down while I'm in school. I don't anticipate that really holding me back much. I should have it paid off in five years or so. I haven't given much thought to a 401(k), though. I guess I'll probably pay into one, but I prefer to invest in fruit trees. I get a delicious annual yield from them that increases every year instead of having to wait decades. Delayed gratification is overrated.
I know that too many folks throw a lot of blame at our generation (and the one following us) for spending our money badly. While I don't think that's fair, especially coming from people who came up in economic boom times and then dismantled the social supports they enjoyed, I do think that we would be just fine if we shifted our focus just a little bit away from consumption and toward conviviality. Especially engineers. We make really good money. Far more than is necessary to have a comfortable and meaningful life.
Finally, I volunteer in my town. For me, the form that takes so far is serving on the planning commission and trying to steer development toward patterns that improve quality of life for people of all ages (mostly encouraging walkability/active transport). In the future, I would like to start a non-profit organization dedicated to building the local economy and local self-reliance. These are things that will be good for my town and, because I live there, good for me.
Oh, how I prattle on... before I end, though, I want to acknowledge that I benefit from a whole lot of privilege and social capital that make it pretty easy for me to survive with very little money. I recognize that a lot of folks don't have those same advantages. I found pretty cheap housing in an expensive place because of people I know, for example. I've had a lot of emotional support from friends and family when I've had difficulties that could otherwise have caused serious setbacks in my education. There are plenty of other examples that I won't bore you with. I want to be clear that I don't think that somebody is morally failing if they need more than $15,000/year to survive. I do, however, think many folks need a lot less than they think they do, and discovering that can be incredibly liberating and joyful. It can also make fear-mongering articles about millennial retirement seem downright laughable.
Sent: 11-08-2019 15:53
From: James Smith
Subject: Millennial Retirement
Someone recently shared an article with me about millennial retirement that got me thinking, and I wanted to see what others thought. Millennials being ages 20-37, most are now in the workforce making these decisions about retirement. Here's the article:
To summarize, the article asserts the millennials need to save HALF of their paycheck in order to retire at 65. I think that's a little alarmist, after all for many in our industry this would probably exceed your federal maximum 401k contribution rates. But there's still room for concern. Predictions of lowered returns on investment, shortfalls of social security, and increased healthcare costs are indeed problems that will affect us.
I, like the 43% of other millennials they surveyed would actually like to retire before age 65. But I also recognize that even the 15% I try to save will likely not be enough to do so. Like they suggest I plan to continue working in some capacity, but no where near full time as suggested. While no where near settled on something I've considered other options: teaching civil engineering classes at a college, writing novels, expert testimony, or simply working part time.
Two things the article doesn't cover that are of concern to me are 1) the fact that the median income hasn't changed since 1970s but inflations gone up ~25%. Millennials aren't being paid enough. 2) Student loan debt. Tuition has gone up over 1,100% since the 1970s, with no changes to median income. These are massive hurdles. Put this together and you have a generation massively in debt without the financial means to recover. With millennials unable to contribute more to retirement because of amount paid on student loans, are we doomed to work well past 65?
So here's what I'd like to get your feedback:
What age/year are you planning to retire?
Are you planning to supplement your income? If so how?
Are you able to save the recommended 15%? Do you save more/less?
Do you feel student loan debt is holding back your ability to contribute to your 401k?
James Smith P.E., M.ASCE
Grand Rapids MI