Discussion Thread

Millennial Retirement

  • 1.  Millennial Retirement

    Posted 11-08-2019 04:27 PM
    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
    Design Engineer
    Grand Rapids MI

  • 2.  RE: Millennial Retirement

    Posted 11-11-2019 11:07 AM

    It's nice to read that someone else is looking at stuff like this and realizing the troubling road that is laid out there before us.  I've been aware of this for awhile now as well and have watched as family members whom thought they had planned well at their ages are working to try to retire near 65.  Most recently my mother retired from her full time job and kept a part time job just to help cover all the bills.  In addition, my mother in law came to live with us for awhile after we lost my father in law and still is running her full time tax prep business at age 73.  It's troubling to me to see things like that in this day and age and know what the future could look like if we don't start planning now.  As such my husband and I have already begun to discuss and start planning where we want to be and what kind of life we want to have as we age.  I'm hoping to retire before 65, I'd like to retire around 60 at the latest but that would be from all work in general, full or part time serious work.  A seasonal or fun type position just to supplement here and there are probably very real possibilities, but as far as my definition of retire I mean retire from the high stress Monday to Friday 8-5 with good potential for Overtime type work.  
    At this stage in my life I have two degrees, an associates and a bachelors. I completed the associates and paid for that degree as I went to school.  However, when I went back to school in 2010 to obtain my bachelors degree it cost a great deal more, and even on the ten year repayment plan I am still approximately four and a half years away from repaying all my student loan debt completely off.  So at this stage in my life I am not able ot save the 15% that they recommend.  I am myself putting away about 7% of my pay and my company is matching with another 6%, so on average I do put away about 13%.  However, as I am still fairly young I do still place most of it in some higher risk investments which the return on at times can be troubling as well.  With the higher risk investments there is both the potential for big gains, but also big losses and with how our current economy is you never know what it will do.  So that too is something you truly need to consider.  How much risk are you truly will to take within the investment process of your 401K?

    So to summarize your initial questions:

    What age/year are you planning to retire?
    Hoping 60, but realize it'll probably be closer to 67 by the time I truly will be able to fully retire

    Are you planning to supplement your income? If so how? 
    Probably part time jobs until I get to the point where I am able to truly go onto retirement fully

    Are you able to save the recommended 15%? Do you save more/less? 
    No, on average right now I save 7% and my company matches 6% for a total of 13%.  I am building towards that 15% but have not been able to get there quite yet

    Do you feel student loan debt is holding back your ability to contribute to your 401k? 
    Yes.  I went to school for my bachelors degree for 3.5 years doing my best to get through as quickly as possible and incur the least amount of debt and still walked out of school with over $60,000 dollars in student loan debt.  I am thankful I have a position where I can pay off my loans in ten years and incur less of the interest that I would have with the longer repayment plan but it also is a higher payment every month and does take a bite out of my expenses that could be utilized to place in my 401K.

    Michelle Hudson EIT, A.M.ASCE
    Design Engineer
    Altoona IA

  • 3.  RE: Millennial Retirement

    Posted 11-12-2019 09:35 AM
    When I attended college back in the dinosaur age, it was still possible for a young person to work their way through, and that is what I did.  The cost of college has far outpaced the general inflation in the economy, making this pathway nearly impossible.  I don't have an answer to your questions, other than at this point, try to control and minimize your cost of living to allow you to save a little more.

    Stacey Morris P.E., M.ASCE
    ETI Corporation
    West Memphis AR

  • 4.  RE: Millennial Retirement

    Posted 11-12-2019 02:55 PM
    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.

    Tel Jensen
    Woodland WA

  • 5.  RE: Millennial Retirement

    Posted 11-13-2019 10:14 AM
    Tel Jensen,

    I love your response and I am motivated by it! All I have to say is...heck yes and keep doing what you are doing. What the world would be like with more people like you...

    Jessie Shocklee P.E., M.ASCE
    Project Engineer
    Boise ID

  • 6.  RE: Millennial Retirement

    Posted 11-13-2019 06:02 PM
    "What the world would be like with more people like you..."

    Knee-deep in quinces and chestnuts. Careful what you wish for.

    You're much too kind, Jessie, but thank you all the same.

    Tel Jensen
    Woodland WA

  • 7.  RE: Millennial Retirement

    Posted 11-14-2019 01:52 PM
    I haven't researched the statistics, so I cannot comment on them. I'm a bit surprised to read that the median income hasn't changed in 50 years.  Wow!  I've seen starting salaries increase in the 10-15 yrs that I've been out of school, so maybe that can be interpreted as the salary spread has changed?

    But I can say that yes, I hope to retire before age 65.  I don't have a target retirement year, though, because a lot can change in the 30 years from now until I turn 65. 

    Also, no matter what, I anticipate that I'll want to work or volunteer part-time/flexibly in retirement so I can remain both physically and mentally active.  At this point, I'm not looking at it as a necessity to supplement retirement - but who know what will happen in 30 years.  I've been saving over 15% annually since I was in college and first opened a Roth IRA (at that point it was probably 50% of my earnings).  I also contribute to a Roth 401k, traditional 401k, and stocks through my employer.  I tried putting more into my retirement accounts early on since I knew it would be easier to save closer to 25 or 30% while I was single and able to make it work - it's a lot more difficult to do right now with a family and daycare expenses.  I recommend all young engineers to do the same (and acknowledge that you don't know what you're capable of accomplishing/saving until you try - just look at all that Tel Jensen accomplishes. Wow.). 

    Currently, student loan debt is not an issue since my husband and I are student loan debt free as of about a year ago.  It was definitely a hindrance earlier on, but not even close to as much of a hindrance that childcare now poses to us!  Childcare costs are substantial and have the ability to far exceed student loan payments.

    Christina Bryz-Gornia P.E., M.ASCE
    Environmental Engineer
    Beltsville MD

  • 8.  RE: Millennial Retirement

    Posted 11-15-2019 10:08 AM
    I remember reading this article and thinking it was a bit alarmist too. After reading the story I had questions that were not answered and I could not find the data. My biggest question is what expenses did the researchers assume retired people have? Taxes and my mortgage account for nearly half of my yearly income. I do not plan on having a mortgage or paying much in taxes when I retire so to maintain the same standard of living will take only about half of what I make now. Changing the expected yields from 10% to 5% is a good idea. 5% is a much more realistic estimate. Retirement planning is very difficult. You have several ways to save. Roth IRA, Roth 401k, traditional IRA and 401k are all different in how they are managed and taxed come retirement. Retirement planning should start with what you want to do when you retire. Estimate your expenses and save accordingly. You would be surprised how much 20k will let you do when you don't have housing costs, income taxes, auto loan, transportation costs, etc.

    Dustin Leduc A.M.ASCE
    Field Engineer
    Shakopee MN

  • 9.  RE: Millennial Retirement

    Posted 11-15-2019 10:09 AM

    Thank you for bringing this issue to light.  I am personally very nervous about retirement and the unknown - plus at this stage in life (with financial demands such as student debt, daycare, first home, and retirement) it's difficult to know how to best save and use my income!  Your post reminded me to go and update my retirement contributions, so, thank you! 

    What age/year are you planning to retire? 65
    Are you planning to supplement your income? If so how?  I hope not... but I'm sure I'll find a way if necessary.
    Are you able to save the recommended 15%? Do you save more/less?  I have been saving between 5 and 15% - based on other financial demands! 
    Do you feel student loan debt is holding back your ability to contribute to your 401k?  YES.  I recently paid off my student loans and have increased my retirement contributions. 

    Rebecca Wolters P.E., A.M.ASCE
    Contech Engineered Solutions
    Hudsonville MI

  • 10.  RE: Millennial Retirement

    Posted 11-15-2019 12:06 PM
    While not a millennial I have some experience with retirement.

    Save as much as you can.  Invest most or all of the savings conservatively.  There will likely be a recession and you do not want to loose much of your savings.  Because your retirement may be long, do not plan to live off of the principle of your savings.  Reserve the principle for major unexpected expenses and for your later years when medical and other expenses will be higher.

    Understand how much you will likely get from Social Security.  Retiring early or taking jobs where your income is on the low side can  negatively impact social security.  As much as possible plan to live off of  social security.

    If you own your home free and clear and only need to pay property taxes and insurance you can get by with far less savings.  This is not an excuse for not saving as much as you can.  If you can pay off your mortgage early.

    Appreciate Medicare.

    Realize that your life style will change when you retire.  Start thinking what you will do with your time when you are retired.  Do you have an advocation that will consume your time?  Do you plan on starting a second career or opening a part time business?  You will no longer be going to work every day and as a result you will need to create a mechanism for social interaction.  Do not  assume that you will want to work full time or that you can get a job.  Many firms have a bias against senior citizens.

    Mark Gilligan
    Berkeley CA

  • 11.  RE: Millennial Retirement

    Posted 11-18-2019 01:28 PM
    A few words of wisdom from one who is a little further along in their career.
    1.  Manage your student loan debt, don't let it manage you.
    2.  Do not over buy in your choice of housing or car.
    3.  Invest in yourself.  An online masters degree and a PE will pay for themselves rather quickly and will pay you for your entire career..
    4.  Invest for the long term.  
    5.  Life will change many times between now and the day that retirement or financial independence arrives.  Keep serving society wholeheartedly until then.

    Douglas Mann P.E., D.CE, M.ASCE
    Lead Coastal Engineer
    Douglas Mann
    Lake Worth FL

  • 12.  RE: Millennial Retirement

    Posted 11-19-2019 06:13 PM
    Some great feedback so far!

    One thing I did want to mention Tel is that most retirement investment firms recommend saving approximately 1/2 year salary by age 30 and 1 year salary by age 40.  These are by no means fixed metrics, but if you start investing in your 401k later your will need to invest more than 15%.  Perhaps not you yourself, Tel, but the average person.

    Knowing how much you'll need is tough.  Without a real personal financial advisor, no article will perfectly cover everyone.  There's so many variables between today and retirement, at best you can account for some but never all.  Healthcare could continue to sky rocket, or virtually vanish.  Let alone what your personal health does.  Childcare costs may go up or down, our generations child birth rates dropping off may change things in the next 20 years, but who can really know.  That's only early care, college rates and if we put children through it financially may change.  Housing costs/values are going up at present, which is great if you own property, crushing if you don't.   Social Security seems less and less like a certainty for our generation.  I would plan on not being able to use it and then be able to live better if I'm wrong.  I suppose that's kind of my general strategy.

    The only certainty for the future right now financially seems to be that nothing is certain.  I plan for and expect the worst, but hope to be wrong.

    I think what I find most disheartening is how many people still simply posit "work harder, spend less".  Inevitably our generation is going to have to continue to do so with the hand we've been dealt.   That said things didn't have to be this way for our generation, why should we have to save and work so much more than any generation before us?

    James Smith P.E., M.ASCE
    Project Engineer
    Grand Rapids MI

  • 13.  RE: Millennial Retirement

    Posted 11-25-2019 10:52 PM
    I think one of the keys is to think about spending as little as is practicable when you are fresh out of university. I was blessed to make it through school without taking out any loans. I wrote scholarship applications like it was a part-time job in late high school and the beginning of college. My scholarships covered my tuition, fees, and some of my books/housing.
    I graduated in 2016 and I have at least 3 friends that have already paid off their student loans. Their strategy was to basically continue living like a "poor college student" until the loans were paid off.
    You  can't look at it like you have $60,000 of income; you have how ever many thousands of dollars of debt to pay off first. You can't spend like all of that is "yours" to spend.

    Granted, they had fewer loans than some since they went to a state school, but I think the attitudes we often see generalized about student debt encourage some to not even try to pay it off in a reasonable amount of time. It's a bit of a self-fulfilling prophesy in some cases.

    To answer your questions:
    What age/year are you planning to retire?
    Hopefully by 65, but I really am not really tied to any set time frame.
    Are you planning to supplement your income? If so how?
    If I needed to I would. I have a diverse set of interests, so there are a lot of things I think I would enjoy as something to keep myself active.
    Are you able to save the recommended 15%? Do you save more/less?
    I save 15 to 25 percent of my direct deposit to my personal accounts and have 6 percent of my income go to my 401k off the top. I plan to increase that soon, but I'm in the process of applying to grad school. I want to wait until after that and continue to build my personal savings to pay for school if needed.
    Do you feel student loan debt is holding back your ability to contribute to your 401k?

    Heidi Wallace EI, A.M.ASCE
    Engineer Intern
    Tulsa OK

  • 14.  RE: Millennial Retirement

    Posted 01-03-2020 10:22 AM
    It is nice to think about retirement- sleeping late, traveling, enlarging your hobbies- just like the good- looking elderly couples with good hair and teeth on the beach as found in the ads. However, there are the inevitable things to consider and these are based upon today- not the future where none of us knows what things will be like when you retire.
    •        Medicare is not free, but it is great- but one should always buy Plan B (outpatient) and Plan D (Rx) in addition to the basic Medicare.
    •        Social Security is also great and some of it is taxable. The big question is when to start taking it. I ran a conservative study before retirement and   it  looked like by immediately taking Social Security upon retirement, it would take 10 years before delaying would have been the better option.
    •       As one ages, someone else will need to do many of the physical things that you have done yourself for decades. You cannot always depend upon your children.
    •       Independent and assisted living options are indeed nice, but they are expensive.
    •      It is very important to understand inherited IRAs  and your own IRAs as far as withdrawals go.
    •      Others in this forum have wisely mentioned saving- this is a must, but it should be sacrosanct and considered as an investment and even if rates are     historically low, time will be on your side.
    •      Ten years before retirement may be the most important with your plan to have no debt in retirement, with the possible exception of your mortgage, which may be hard to escape from. This means that in retirement, you should pay all of your credit card charges each month and your car(s) and other large items should be relatively new and paid for.
    •      In your work life, it is good to have developed very specialized skills that could lead to consulting work or part-time employment.
    •      Finally- never think that you deserve buying something that you cannot afford- especially if you are tempted to go into your retirement account.

    Jim Worrell] Retired
    PE, RLS (retired)
    Raleigh, NC