Also this is from 2019. But playing with Fed Survey data.
Financial Assets by Age Group per thousand. This is the median, not the mean so it should help correct outliers. And oof it ain't pretty.
Not really enough for a down payment in most markets especially as banks are still very wary of higher risk loans at the moment.
Also total assets by age, so including car/house/financial assets there is an expected gap but you do see an increase at least before the pandemic in the 35-44 aka elder millenials/young X in this category pre-pandemic which is probably tied to some acquiring of houses before shit hit the fan.
I will say they probably should have a 25-34 category instead of just under 25 for these. But its the Fed so they don't.
These charts always terrify me because pensions, 401k, and IRAs are part of Financial Assets. The median 65 year old has less than 55k in retirement savings. Like holy shit is that a disaster in the making.
It doesn't include their house that they can sell if they are comfortable going into a retirement community but either way some 40-50% of boomers will retire into poverty and many more will be forced into a lower standard of living. For a 401(k) to be viable to retire on you have to contribute around 15% for most of your working career. The average contribution is 7% and according to a depressing link only 21% of earners are contributing 10% or more.
Also this is from 2019. But playing with Fed Survey data.
Financial Assets by Age Group per thousand. This is the median, not the mean so it should help correct outliers. And oof it ain't pretty.
Not really enough for a down payment in most markets especially as banks are still very wary of higher risk loans at the moment.
Also total assets by age, so including car/house/financial assets there is an expected gap but you do see an increase at least before the pandemic in the 35-44 aka elder millenials/young X in this category pre-pandemic which is probably tied to some acquiring of houses before shit hit the fan.
I will say they probably should have a 25-34 category instead of just under 25 for these. But its the Fed so they don't.
These charts always terrify me because pensions, 401k, and IRAs are part of Financial Assets. The median 65 year old has less than 55k in retirement savings. Like holy shit is that a disaster in the making.
It doesn't include their house that they can sell if they are comfortable going into a retirement community but either way some 40-50% of boomers will retire into poverty and many more will be forced into a lower standard of living. For a 401(k) to be viable to retire on you have to contribute around 15% for most of your working career. The average contribution is 7% and according to a depressing link only 21% of earners are contributing 10% or more.
Second chart should include housing and other physical assets such as the car.
Edit: And even with housing that is very very low.
Mazzyx on
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ButtersA glass of some milksRegistered Userregular
It's a wonder we aren't producing more children. It's almost as if we can barely afford to feed and house ourselves!
Housing prices are skyrocketing primarily because of record low supply. Building was already lagging demand for most of the last decade and thanks to the pandemic you're lucky to even get a deck built let alone a house.
Yep, that plus a large number of prospective homebuyers as Millenials enter prime earning territory and boomers not giving up their homes.
Is this actually a real thing? People talk often talk about generational cohorts, like millennials, entering some life stage altogether as a group, but there are roughly equal people who are 25, or 30, or 35, or 40, right? It's not like there is actually a distinct wave of people who are a certain age compared to +-5 years, are there? WIth perhaps one exception being baby boomers, but I still think the difference would be, like, 20%, not like 3x how people talk about it.
Edit: Figured I could just go answer my own question. It looks like there interesting spikes in a view specific years, but age groups tend to be with 10% of each other. Honestly more variability in this than i would have guessed.
You need to save up about $1million in retirement savings to have a pleasant retirement. That's hilariously unlikely for anyone below the top 10% of earners.
It's closer to $2 million for pleasant depending on your age. $1 million is more "at least you're not a feature on Last Week Tonight".
You need to save up about $1million in retirement savings to have a pleasant retirement. That's hilariously unlikely for anyone below the top 10% of earners.
It's closer to $2 million for pleasant depending on your age. $1 million is more "at least you're not a feature on Last Week Tonight".
$1 million gets you an income of about $40,000 a year which is fine for retired people who own their house and don't travel.
You need to save up about $1million in retirement savings to have a pleasant retirement. That's hilariously unlikely for anyone below the top 10% of earners.
It's closer to $2 million for pleasant depending on your age. $1 million is more "at least you're not a feature on Last Week Tonight".
I remember some Congress critters floating some scheme about medicare being usable in Mexico and encouraging retirees to go abroad.
It's a wonder we aren't producing more children. It's almost as if we can barely afford to feed and house ourselves!
The drop in kids though has some economic ties isn't 100% economic. And even though we are higher still than most of Asia, Asia is lower but has less extreme issues with affordability and income inequality.
This is a different trend we know really well via demography.
US is in stage 4 right now. I don't think really anyone has hit stage 5. Also it was added later on due models of populations.
Though this ties in because we are in the low birthrate, low mortality, long life span era where you get a lot of traditional turn over doesn't occur. Which is really another complicating factor.
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HedgethornAssociate Professor of Historical Hobby HorsesIn the Lions' DenRegistered Userregular
edited June 2021
Knowing how much K-12 schools are presently suffering from that post-2008 drop-off in births, and how higher education is already preparing to deal with that pain in a few years, I can only imagine how school planners must have been freaking out c. 1947. "WHAT DO YOU MEAN THERE WERE A MILLION MORE KIDS BORN THIS YEAR THAN LAST YEAR"
The baby boom had a fairly steep ride & dropoff - hence the giant bulge that shouldn't normally exist
There’s a 800k drop off between 71 and 72 year olds on this chart, the largest year-to-year change by several standard deviations
I guess the increase in births would have been a 1-year, insanely drastic change that corrected itself immediately (like 1947-1948?)….or something killed a bunch of people or something….
Edit: Jesus fuck I guess you can read this chart “backwards” or whatever, yeah everyone went to bone town like crazy in 1946
You need to save up about $1million in retirement savings to have a pleasant retirement. That's hilariously unlikely for anyone below the top 10% of earners.
It's closer to $2 million for pleasant depending on your age. $1 million is more "at least you're not a feature on Last Week Tonight".
$1 million gets you an income of about $40,000 a year which is fine for retired people who own their house and don't travel.
It's not actually possible for everyone to get to $1M though much less 2. US total wealth is $100T. The US isn't quite at 20% 65+ but it will be pretty soon, at which point to meet $1M two thirds of all wealth would have to be owned by 65+ and all the rest probably by the 55-64 to prep for their retirement
Pretty much there's a bunch of changes that need to happen and everyone in my age cohort and now the one below it at this point, are going to just have to take the hits all our parents were too shitty to handle.
Like maybe my one year old can have retirement as a concept if we do a lot of work to unfuck everything by the time they're coming up in this world.
We are going to have to pay double for everything because Boomers thought they could get it all half off.
The baby boom had a fairly steep ride & dropoff - hence the giant bulge that shouldn't normally exist
There’s a 800k drop off between 71 and 72 year olds on this chart, the largest year-to-year change by several standard deviations
I guess the increase in births would have been a 1-year, insanely drastic change that corrected itself immediately (like 1947-1948?)….or something killed a bunch of people or something….
Edit: Jesus fuck I guess you can read this chart “backwards” or whatever, yeah everyone went to bone town like crazy in 1946
Yeah I didn't do the math but I assumed the vertical line was the back half of 1945.
You need to save up about $1million in retirement savings to have a pleasant retirement. That's hilariously unlikely for anyone below the top 10% of earners.
It's closer to $2 million for pleasant depending on your age. $1 million is more "at least you're not a feature on Last Week Tonight".
$1 million gets you an income of about $40,000 a year which is fine for retired people who own their house and don't travel.
It's not actually possible for everyone to get to $1M though much less 2. US total wealth is $100T. The US isn't quite at 20% 65+ but it will be pretty soon, at which point to meet $1M two thirds of all wealth would have to be owned by 65+ and all the rest probably by the 55-64 to prep for their retirement
Housing prices are skyrocketing primarily because of record low supply. Building was already lagging demand for most of the last decade and thanks to the pandemic you're lucky to even get a deck built let alone a house.
I mean it's a "yes, and" situation
Yes supply is super low and we haven't built enough at all over the last decade plus to meet demand, AND current fed actions are keeping mortgage rates super low compared to normal which further increases demand as a larger number of people can afford to switch from renting to buying.
That switch from renting to buying requires a shitload of liquid assets as a down payment many people who should be ready for the switch can't muster. Even when banks were less stingy 3-4 years ago, most lenders required 20% down to avoid mortgage insurance which tacks on like $400-500 to your monthly payment. That's an option that only available to an usual combination of high-income yet low savings earner.
Maybe interest rates are too friendly to AirBnB investors but I don't see how fed actions help the millenials that can't afford down payments. We need more supply to make home owning a reality for them.
Also, fuck NIMBYism
My MI only added around 50 / month on my mortgage, it wasn't that big a big deal? 400-500 would seem a bit ridiculous, I've never seen it that high. As far as down payments, there's a number of loan options that require very low down payments, VA and some USDA loans don't even require any at all. So there are options, but it certainly is a very real struggle. The pressing thing that's preventing first time homebuyers right now isn't getting loans, it's simply being priced out of an insane bull market.
The baby boom had a fairly steep ride & dropoff - hence the giant bulge that shouldn't normally exist
There’s a 800k drop off between 71 and 72 year olds on this chart, the largest year-to-year change by several standard deviations
I guess the increase in births would have been a 1-year, insanely drastic change that corrected itself immediately (like 1947-1948?)….or something killed a bunch of people or something….
Edit: Jesus fuck I guess you can read this chart “backwards” or whatever, yeah everyone went to bone town like crazy in 1946
Killing Nazis is a hell of an aphrodisiac. Maybe that'll help solve our demographic concerns going forward.
There are a lot of countries whose pyramid looks a lot worse than the USes. On a global economic scale, the US has a huge advantage over Europe and even some advantage over China. Europe is already nearly 5y older than the USA.
It is not official, since China stopped releasing year over year growth rates a few years ago, but their 5 year number hints that 2020 may have been Chinas first shrink year.
Other countries are already on steep declines. Japan is the earliest, and by some estimates is going down to 50m people in the next 70 years (from a peak of 126m 5 years ago). A lot of European nations, like Italy, Greece, Poland, Russia are estimated to lose about 20% in the 30 years.
Germany has a ton of elderly but the free labor immigration is causing massive shifts.
India still has growth in it, and there are some really young African nations. If Nigeria stabilizes and keeps everyone alive that is currently alive, it'll triple or more in 60 years.
These demographics are what makes me extra worried about both the 21st century from a political point of view, and climate change inaction for the time beyond. Such old nations tend to skew conservative, old people vote with self interest, and will squeeze every other generation dry.
You need to save up about $1million in retirement savings to have a pleasant retirement. That's hilariously unlikely for anyone below the top 10% of earners.
Is there data for this? SS pays out $3k at the max for 2020. That's $36k a year and very conservative return on a $1 million portfolio is $40k which combined is well above the median household income.
Housing prices are skyrocketing primarily because of record low supply. Building was already lagging demand for most of the last decade and thanks to the pandemic you're lucky to even get a deck built let alone a house.
I mean it's a "yes, and" situation
Yes supply is super low and we haven't built enough at all over the last decade plus to meet demand, AND current fed actions are keeping mortgage rates super low compared to normal which further increases demand as a larger number of people can afford to switch from renting to buying.
That switch from renting to buying requires a shitload of liquid assets as a down payment many people who should be ready for the switch can't muster. Even when banks were less stingy 3-4 years ago, most lenders required 20% down to avoid mortgage insurance which tacks on like $400-500 to your monthly payment. That's an option that only available to an usual combination of high-income yet low savings earner.
Maybe interest rates are too friendly to AirBnB investors but I don't see how fed actions help the millenials that can't afford down payments. We need more supply to make home owning a reality for them.
Also, fuck NIMBYism
My MI only added around 50 / month on my mortgage, it wasn't that big a big deal? 400-500 would seem a bit ridiculous, I've never seen it that high. As far as down payments, there's a number of loan options that require very low down payments, VA and some USDA loans don't even require any at all. So there are options, but it certainly is a very real struggle. The pressing thing that's preventing first time homebuyers right now isn't getting loans, it's simply being priced out of an insane bull market.
I mean my whole point was that the bull market is in part pushed by low interest rates and more people being able to afford a new property or more expensive property.
There are a lot of countries whose pyramid looks a lot worse than the USes. On a global economic scale, the US has a huge advantage over Europe and even some advantage over China. Europe is already nearly 5y older than the USA.
It is not official, since China stopped releasing year over year growth rates a few years ago, but their 5 year number hints that 2020 may have been Chinas first shrink year.
Other countries are already on steep declines. Japan is the earliest, and by some estimates is going down to 50m people in the next 70 years (from a peak of 126m 5 years ago). A lot of European nations, like Italy, Greece, Poland, Russia are estimated to lose about 20% in the 30 years.
Germany has a ton of elderly but the free labor immigration is causing massive shifts.
India still has growth in it, and there are some really young African nations. If Nigeria stabilizes and keeps everyone alive that is currently alive, it'll triple or more in 60 years.
These demographics are what makes me extra worried about both the 21st century from a political point of view, and climate change inaction for the time beyond. Such old nations tend to skew conservative, old people vote with self interest, and will squeeze every other generation dry.
This is true because the US is just moving from stage 3 to stage 4 of the demographic transition.
A lot of the countries you are pointing moved there decades ago.
Though probably the most destabilizing one not listed though is China. Between the 1 child policy, a hard inclination for boys, and a rapidly aging population they are very much going to look like South Korea or Japan with a lot less sturdy foundation of support.
Housing prices are skyrocketing primarily because of record low supply. Building was already lagging demand for most of the last decade and thanks to the pandemic you're lucky to even get a deck built let alone a house.
I mean it's a "yes, and" situation
Yes supply is super low and we haven't built enough at all over the last decade plus to meet demand, AND current fed actions are keeping mortgage rates super low compared to normal which further increases demand as a larger number of people can afford to switch from renting to buying.
That switch from renting to buying requires a shitload of liquid assets as a down payment many people who should be ready for the switch can't muster. Even when banks were less stingy 3-4 years ago, most lenders required 20% down to avoid mortgage insurance which tacks on like $400-500 to your monthly payment. That's an option that only available to an usual combination of high-income yet low savings earner.
Maybe interest rates are too friendly to AirBnB investors but I don't see how fed actions help the millenials that can't afford down payments. We need more supply to make home owning a reality for them.
Also, fuck NIMBYism
My MI only added around 50 / month on my mortgage, it wasn't that big a big deal? 400-500 would seem a bit ridiculous, I've never seen it that high. As far as down payments, there's a number of loan options that require very low down payments, VA and some USDA loans don't even require any at all. So there are options, but it certainly is a very real struggle. The pressing thing that's preventing first time homebuyers right now isn't getting loans, it's simply being priced out of an insane bull market.
I mean my whole point was that the bull market is in part pushed by low interest rates and more people being able to afford a new property or more expensive property.
The home values aren't gonna drop though, everyone that's bought in the last decade would rather rent their place out than sell it for half what they bought it for cause no one can afford the downpayment or interest on the value they paid for it. Raising the interest rate isn't going to magically lower home prices, or allow people to afford down payments on overpriced houses, its just gonna mean no one can afford either the down payment or the monthly payments after that. Without fixing the core issue raising the interest rate just locks more people out of home buying than already were locked out.
The baby boom had a fairly steep ride & dropoff - hence the giant bulge that shouldn't normally exist
There’s a 800k drop off between 71 and 72 year olds on this chart, the largest year-to-year change by several standard deviations
I guess the increase in births would have been a 1-year, insanely drastic change that corrected itself immediately (like 1947-1948?)….or something killed a bunch of people or something….
Edit: Jesus fuck I guess you can read this chart “backwards” or whatever, yeah everyone went to bone town like crazy in 1946
Keep in mind also that WWII meant a lot of our population that would have been reproducing was tied up directly (military) or indirectly (support like factory work, etc). So you had a down turn followed by an upturn as everyone came back to a normal life.
You need to save up about $1million in retirement savings to have a pleasant retirement. That's hilariously unlikely for anyone below the top 10% of earners.
Is there data for this? SS pays out $3k at the max for 2020. That's $36k a year and very conservative return on a $1 million portfolio is $40k which combined is well above the median household income.
There are a significant number of people who simply don't know what the fuck they're doing with the market, or don't invest in it at all because they don't trust it.
Think of all the horror stories of people who dutifully put money into their IRA each year and never moved it out of their money market account. Think of the doomers who insist that "THIS is the recession that will destroy the economy" and sell at at a low because obviously the market has a ways to go, and then they never buy back in, waiting for the dip that never comes. Or the goldbugs (and nowadays, crypto "investors") who have an inherent distrust of the market, and thus put their money in assets that are barely worth the name (or even worse, believe in keeping everything in cash). And, of course, there are the ones who just plain outspend what they make.
Over a lifetime of earning, I'd venture to say that at least 40-50% of the US population earns enough that they can hit a $1MM portfolio by retirement age. Half of them won't because of the issues above.
You need to save up about $1million in retirement savings to have a pleasant retirement. That's hilariously unlikely for anyone below the top 10% of earners.
Is there data for this? SS pays out $3k at the max for 2020. That's $36k a year and very conservative return on a $1 million portfolio is $40k which combined is well above the median household income.
Average is only about 1500, in order to get the max you need to have been hitting the SS tax cap, or about 140k in todays bucks for an individual.
Formulas a bit goofy, but basically right now you get 1000 a month plus 1/3 (your monthly income - 1000). So if you averaged 50k(in today dollars for 35 working years), you'd get you about $2000 a month.
E: I will add that SS as part of retirement planning does tend to be ignored in a lot of places. Which is a mix of prudent planning-the boomers will never stop finding new ways to fuck us- and because of how their incentives work. If they can convince you you need to save $400 a month (which they make some % off of) they are better off than if you really would be good at $300 a month.
They do the same thing with your "needed income" for retirement, by pegging it to a % of your income. Change jobs and get a big raise, now there's no way you can retire on 60k a year-look at all the red under this chart-, you'll need 65k a year till you turn 99.
Housing prices are skyrocketing primarily because of record low supply. Building was already lagging demand for most of the last decade and thanks to the pandemic you're lucky to even get a deck built let alone a house.
I mean it's a "yes, and" situation
Yes supply is super low and we haven't built enough at all over the last decade plus to meet demand, AND current fed actions are keeping mortgage rates super low compared to normal which further increases demand as a larger number of people can afford to switch from renting to buying.
That switch from renting to buying requires a shitload of liquid assets as a down payment many people who should be ready for the switch can't muster. Even when banks were less stingy 3-4 years ago, most lenders required 20% down to avoid mortgage insurance which tacks on like $400-500 to your monthly payment. That's an option that only available to an usual combination of high-income yet low savings earner.
Maybe interest rates are too friendly to AirBnB investors but I don't see how fed actions help the millenials that can't afford down payments. We need more supply to make home owning a reality for them.
Also, fuck NIMBYism
My MI only added around 50 / month on my mortgage, it wasn't that big a big deal? 400-500 would seem a bit ridiculous, I've never seen it that high. As far as down payments, there's a number of loan options that require very low down payments, VA and some USDA loans don't even require any at all. So there are options, but it certainly is a very real struggle. The pressing thing that's preventing first time homebuyers right now isn't getting loans, it's simply being priced out of an insane bull market.
I mean my whole point was that the bull market is in part pushed by low interest rates and more people being able to afford a new property or more expensive property.
The home values aren't gonna drop though, everyone that's bought in the last decade would rather rent their place out than sell it for half what they bought it for cause no one can afford the downpayment or interest on the value they paid for it. Raising the interest rate isn't going to magically lower home prices, or allow people to afford down payments on overpriced houses, its just gonna mean no one can afford either the down payment or the monthly payments after that. Without fixing the core issue raising the interest rate just locks more people out of home buying than already were locked out.
Also this is from 2019. But playing with Fed Survey data.
Financial Assets by Age Group per thousand. This is the median, not the mean so it should help correct outliers. And oof it ain't pretty.
Not really enough for a down payment in most markets especially as banks are still very wary of higher risk loans at the moment.
Also total assets by age, so including car/house/financial assets there is an expected gap but you do see an increase at least before the pandemic in the 35-44 aka elder millenials/young X in this category pre-pandemic which is probably tied to some acquiring of houses before shit hit the fan.
I will say they probably should have a 25-34 category instead of just under 25 for these. But its the Fed so they don't.
These charts always terrify me because pensions, 401k, and IRAs are part of Financial Assets. The median 65 year old has less than 55k in retirement savings. Like holy shit is that a disaster in the making.
You need to save up about $1million in retirement savings to have a pleasant retirement. That's hilariously unlikely for anyone below the top 10% of earners.
It's closer to $2 million for pleasant depending on your age. $1 million is more "at least you're not a feature on Last Week Tonight".
$1 million gets you an income of about $40,000 a year which is fine for retired people who own their house and don't travel.
It's not actually possible for everyone to get to $1M though much less 2. US total wealth is $100T. The US isn't quite at 20% 65+ but it will be pretty soon, at which point to meet $1M two thirds of all wealth would have to be owned by 65+ and all the rest probably by the 55-64 to prep for their retirement
Huh, that's a really interesting point I'd never considered before. Assuming a population of 330 million that puts the average US wealth at about $300k per person.
There are implications here for UBI as well. This implies that we're not rich enough as a nation to support an income of, say, $40k per person without the need for work. The theoretical maximum would be about $12k per person per year.
edit: According to estimations by Credit Suisse, the US has about 18.6 million millionaires. The US has 49.2 million residents above age 65.
Housing prices are skyrocketing primarily because of record low supply. Building was already lagging demand for most of the last decade and thanks to the pandemic you're lucky to even get a deck built let alone a house.
I mean it's a "yes, and" situation
Yes supply is super low and we haven't built enough at all over the last decade plus to meet demand, AND current fed actions are keeping mortgage rates super low compared to normal which further increases demand as a larger number of people can afford to switch from renting to buying.
That switch from renting to buying requires a shitload of liquid assets as a down payment many people who should be ready for the switch can't muster. Even when banks were less stingy 3-4 years ago, most lenders required 20% down to avoid mortgage insurance which tacks on like $400-500 to your monthly payment. That's an option that only available to an usual combination of high-income yet low savings earner.
Maybe interest rates are too friendly to AirBnB investors but I don't see how fed actions help the millenials that can't afford down payments. We need more supply to make home owning a reality for them.
Also, fuck NIMBYism
My MI only added around 50 / month on my mortgage, it wasn't that big a big deal? 400-500 would seem a bit ridiculous, I've never seen it that high. As far as down payments, there's a number of loan options that require very low down payments, VA and some USDA loans don't even require any at all. So there are options, but it certainly is a very real struggle. The pressing thing that's preventing first time homebuyers right now isn't getting loans, it's simply being priced out of an insane bull market.
I mean my whole point was that the bull market is in part pushed by low interest rates and more people being able to afford a new property or more expensive property.
The home values aren't gonna drop though, everyone that's bought in the last decade would rather rent their place out than sell it for half what they bought it for cause no one can afford the downpayment or interest on the value they paid for it. Raising the interest rate isn't going to magically lower home prices, or allow people to afford down payments on overpriced houses, its just gonna mean no one can afford either the down payment or the monthly payments after that. Without fixing the core issue raising the interest rate just locks more people out of home buying than already were locked out.
Yes, I don't disagree with any of that.
As well there will still be folks buying, and by folks I mostly mean corps. Raising the interest rate significantly doesn't do anything except make the market even more ripe for corps to swing in, buy up all decent and halfway decent houses, for stupid prices, to rent them out and never sell them again (except to other corps). The interest rate is a lever we should not fuck with for the foreseeable future because it isn't gonna fix anything and will only exacerbate the much larger issues of the market.
The interest rate will change whenever the fed raises rates on securities as a whole. There isn't really direct control over mortgage rates specifically. And it will definitely go back up again because right now it's way way way lower than normal. Like literally the lowest it's been in the FRED's data.
Also this is from 2019. But playing with Fed Survey data.
Financial Assets by Age Group per thousand. This is the median, not the mean so it should help correct outliers. And oof it ain't pretty.
Not really enough for a down payment in most markets especially as banks are still very wary of higher risk loans at the moment.
Also total assets by age, so including car/house/financial assets there is an expected gap but you do see an increase at least before the pandemic in the 35-44 aka elder millenials/young X in this category pre-pandemic which is probably tied to some acquiring of houses before shit hit the fan.
I will say they probably should have a 25-34 category instead of just under 25 for these. But its the Fed so they don't.
These charts always terrify me because pensions, 401k, and IRAs are part of Financial Assets. The median 65 year old has less than 55k in retirement savings. Like holy shit is that a disaster in the making.
Yup. Welcome to where Gen X, Millennials, and any generation after that is, "Expected to work until Death."
Unless you already are a 1%er.
Or a baby boomer like my mom who was suckered by Madoff and has 0 retirement now. She's almost 70 and is still working.
You don't even have to be suckered.
My MIL had a reasonable 401k saved up and most of her debt paid off. But then lost her job in 2007 when the steel plant she managed deliveries for downsized. She was out of work for ~3 years and lived off hardship withdraws until she could get a new job.
But while of course circumstances can change and bad luck can happen, I think a lot more than the 1%ers can have a reasonable expectation of a fairly pleasant retirement.
Not nearly as many as should, granted, but a lot comes down to what you consider a comfortable / pleasant retirement.
The interest rate will change whenever the fed raises rates on securities as a whole. There isn't really direct control over mortgage rates specifically. And it will definitely go back up again because right now it's way way way lower than normal. Like literally the lowest it's been in the FRED's data.
Yes, because idiots have been in charge for a long time and they lowered this rate when they absolutely shouldn't have been doing so. Unfortunately that caused a lot of problems that need to be directly fixed before this rate is increased in any meaningful way again because increasing it before those problems are fixed will result in little but a further concentration of wealth.
I'm not sure an increased rate would mean individual owners would get priced out instead of home prices dropping.
life's a game that you're bound to lose / like using a hammer to pound in screws
fuck up once and you break your thumb / if you're happy at all then you're god damn dumb
that's right we're on a fucked up cruise / God is dead but at least we have booze
bad things happen, no one knows why / the sun burns out and everyone dies
You need to save up about $1million in retirement savings to have a pleasant retirement. That's hilariously unlikely for anyone below the top 10% of earners.
It's closer to $2 million for pleasant depending on your age. $1 million is more "at least you're not a feature on Last Week Tonight".
$1 million gets you an income of about $40,000 a year which is fine for retired people who own their house and don't travel.
It's not actually possible for everyone to get to $1M though much less 2. US total wealth is $100T. The US isn't quite at 20% 65+ but it will be pretty soon, at which point to meet $1M two thirds of all wealth would have to be owned by 65+ and all the rest probably by the 55-64 to prep for their retirement
Huh, that's a really interesting point I'd never considered before. Assuming a population of 330 million that puts the average US wealth at about $300k per person.
There are implications here for UBI as well. This implies that we're not rich enough as a nation to support an income of, say, $40k per person without the need for work. The theoretical maximum would be about $12k per person per year.
edit: According to estimations by Credit Suisse, the US has about 18.6 million millionaires. The US has 49.2 million residents above age 65.
Not saying the conclusion are wrong, but this math is a bit problematic. The 1mm is at time of retirement, and the 40k assumes basically a "don't touch your principle" levels of conservativeness.
If you need 1MM at 65, you don't need 1MM at 78, because you are 13 years closer the great bear market in the sky. And if you assume a couple % points of burn down, you don't quite need 1MM dollars.
Time is the great variable with all this stuff.
I forget who, but someone recently proposed a "birthright" fund, which was basically the USGov funding a 10k IRA for every newborn, which would be worth about 1MM at 65, assuming 7% growth.
I'm not sure an increased rate would mean individual owners would get priced out instead of home prices dropping.
No one on a fixed rate would get affected, it would simply shift demand inward over the short-term which would lessen the increase in housing costs over that same period.
You need to save up about $1million in retirement savings to have a pleasant retirement. That's hilariously unlikely for anyone below the top 10% of earners.
It's closer to $2 million for pleasant depending on your age. $1 million is more "at least you're not a feature on Last Week Tonight".
$1 million gets you an income of about $40,000 a year which is fine for retired people who own their house and don't travel.
It's not actually possible for everyone to get to $1M though much less 2. US total wealth is $100T. The US isn't quite at 20% 65+ but it will be pretty soon, at which point to meet $1M two thirds of all wealth would have to be owned by 65+ and all the rest probably by the 55-64 to prep for their retirement
Huh, that's a really interesting point I'd never considered before. Assuming a population of 330 million that puts the average US wealth at about $300k per person.
There are implications here for UBI as well. This implies that we're not rich enough as a nation to support an income of, say, $40k per person without the need for work. The theoretical maximum would be about $12k per person per year.
edit: According to estimations by Credit Suisse, the US has about 18.6 million millionaires. The US has 49.2 million residents above age 65.
Not saying the conclusion are wrong, but this math is a bit problematic. The 1mm is at time of retirement, and the 40k assumes basically a "don't touch your principle" levels of conservativeness.
If you need 1MM at 65, you don't need 1MM at 78, because you are 13 years closer the great bear market in the sky. And if you assume a couple % points of burn down, you don't quite need 1MM dollars.
Time is the great variable with all this stuff.
I forget who, but someone recently proposed a "birthright" fund, which was basically the USGov funding a 10k IRA for every newborn, which would be worth about 1MM at 65, assuming 7% growth.
So on the one hand. The magic of compound interest makes that a great idea. On the other hand, that's a fucking terrible idea because there is zero chance that money makes it there instead of being treated as a great big pile of funny money by investors
You need to save up about $1million in retirement savings to have a pleasant retirement. That's hilariously unlikely for anyone below the top 10% of earners.
It's closer to $2 million for pleasant depending on your age. $1 million is more "at least you're not a feature on Last Week Tonight".
$1 million gets you an income of about $40,000 a year which is fine for retired people who own their house and don't travel.
It's not actually possible for everyone to get to $1M though much less 2. US total wealth is $100T. The US isn't quite at 20% 65+ but it will be pretty soon, at which point to meet $1M two thirds of all wealth would have to be owned by 65+ and all the rest probably by the 55-64 to prep for their retirement
Huh, that's a really interesting point I'd never considered before. Assuming a population of 330 million that puts the average US wealth at about $300k per person.
There are implications here for UBI as well. This implies that we're not rich enough as a nation to support an income of, say, $40k per person without the need for work. The theoretical maximum would be about $12k per person per year.
edit: According to estimations by Credit Suisse, the US has about 18.6 million millionaires. The US has 49.2 million residents above age 65.
Not saying the conclusion are wrong, but this math is a bit problematic. The 1mm is at time of retirement, and the 40k assumes basically a "don't touch your principle" levels of conservativeness.
If you need 1MM at 65, you don't need 1MM at 78, because you are 13 years closer the great bear market in the sky. And if you assume a couple % points of burn down, you don't quite need 1MM dollars.
Time is the great variable with all this stuff.
I forget who, but someone recently proposed a "birthright" fund, which was basically the USGov funding a 10k IRA for every newborn, which would be worth about 1MM at 65, assuming 7% growth.
That seems like a very convoluted way to avoid the obvious solution of just increasing Social Security payouts. Which is a birthright for most 65 year old Americans anyway.
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It doesn't include their house that they can sell if they are comfortable going into a retirement community but either way some 40-50% of boomers will retire into poverty and many more will be forced into a lower standard of living. For a 401(k) to be viable to retire on you have to contribute around 15% for most of your working career. The average contribution is 7% and according to a depressing link only 21% of earners are contributing 10% or more.
Second chart should include housing and other physical assets such as the car.
Edit: And even with housing that is very very low.
Is this actually a real thing? People talk often talk about generational cohorts, like millennials, entering some life stage altogether as a group, but there are roughly equal people who are 25, or 30, or 35, or 40, right? It's not like there is actually a distinct wave of people who are a certain age compared to +-5 years, are there? WIth perhaps one exception being baby boomers, but I still think the difference would be, like, 20%, not like 3x how people talk about it.
Edit: Figured I could just go answer my own question. It looks like there interesting spikes in a view specific years, but age groups tend to be with 10% of each other. Honestly more variability in this than i would have guessed.
It's closer to $2 million for pleasant depending on your age. $1 million is more "at least you're not a feature on Last Week Tonight".
$1 million gets you an income of about $40,000 a year which is fine for retired people who own their house and don't travel.
I remember some Congress critters floating some scheme about medicare being usable in Mexico and encouraging retirees to go abroad.
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The drop in kids though has some economic ties isn't 100% economic. And even though we are higher still than most of Asia, Asia is lower but has less extreme issues with affordability and income inequality.
This is a different trend we know really well via demography.
The Demographic Transition
US is in stage 4 right now. I don't think really anyone has hit stage 5. Also it was added later on due models of populations.
Though this ties in because we are in the low birthrate, low mortality, long life span era where you get a lot of traditional turn over doesn't occur. Which is really another complicating factor.
There’s a 800k drop off between 71 and 72 year olds on this chart, the largest year-to-year change by several standard deviations
I guess the increase in births would have been a 1-year, insanely drastic change that corrected itself immediately (like 1947-1948?)….or something killed a bunch of people or something….
Edit: Jesus fuck I guess you can read this chart “backwards” or whatever, yeah everyone went to bone town like crazy in 1946
It's not actually possible for everyone to get to $1M though much less 2. US total wealth is $100T. The US isn't quite at 20% 65+ but it will be pretty soon, at which point to meet $1M two thirds of all wealth would have to be owned by 65+ and all the rest probably by the 55-64 to prep for their retirement
We are going to have to pay double for everything because Boomers thought they could get it all half off.
Yeah I didn't do the math but I assumed the vertical line was the back half of 1945.
Well this post is a hangover cure
My MI only added around 50 / month on my mortgage, it wasn't that big a big deal? 400-500 would seem a bit ridiculous, I've never seen it that high. As far as down payments, there's a number of loan options that require very low down payments, VA and some USDA loans don't even require any at all. So there are options, but it certainly is a very real struggle. The pressing thing that's preventing first time homebuyers right now isn't getting loans, it's simply being priced out of an insane bull market.
Killing Nazis is a hell of an aphrodisiac. Maybe that'll help solve our demographic concerns going forward.
It is not official, since China stopped releasing year over year growth rates a few years ago, but their 5 year number hints that 2020 may have been Chinas first shrink year.
Other countries are already on steep declines. Japan is the earliest, and by some estimates is going down to 50m people in the next 70 years (from a peak of 126m 5 years ago). A lot of European nations, like Italy, Greece, Poland, Russia are estimated to lose about 20% in the 30 years.
Germany has a ton of elderly but the free labor immigration is causing massive shifts.
India still has growth in it, and there are some really young African nations. If Nigeria stabilizes and keeps everyone alive that is currently alive, it'll triple or more in 60 years.
These demographics are what makes me extra worried about both the 21st century from a political point of view, and climate change inaction for the time beyond. Such old nations tend to skew conservative, old people vote with self interest, and will squeeze every other generation dry.
Is there data for this? SS pays out $3k at the max for 2020. That's $36k a year and very conservative return on a $1 million portfolio is $40k which combined is well above the median household income.
I mean my whole point was that the bull market is in part pushed by low interest rates and more people being able to afford a new property or more expensive property.
This is true because the US is just moving from stage 3 to stage 4 of the demographic transition.
A lot of the countries you are pointing moved there decades ago.
Though probably the most destabilizing one not listed though is China. Between the 1 child policy, a hard inclination for boys, and a rapidly aging population they are very much going to look like South Korea or Japan with a lot less sturdy foundation of support.
The home values aren't gonna drop though, everyone that's bought in the last decade would rather rent their place out than sell it for half what they bought it for cause no one can afford the downpayment or interest on the value they paid for it. Raising the interest rate isn't going to magically lower home prices, or allow people to afford down payments on overpriced houses, its just gonna mean no one can afford either the down payment or the monthly payments after that. Without fixing the core issue raising the interest rate just locks more people out of home buying than already were locked out.
Keep in mind also that WWII meant a lot of our population that would have been reproducing was tied up directly (military) or indirectly (support like factory work, etc). So you had a down turn followed by an upturn as everyone came back to a normal life.
There are a significant number of people who simply don't know what the fuck they're doing with the market, or don't invest in it at all because they don't trust it.
Think of all the horror stories of people who dutifully put money into their IRA each year and never moved it out of their money market account. Think of the doomers who insist that "THIS is the recession that will destroy the economy" and sell at at a low because obviously the market has a ways to go, and then they never buy back in, waiting for the dip that never comes. Or the goldbugs (and nowadays, crypto "investors") who have an inherent distrust of the market, and thus put their money in assets that are barely worth the name (or even worse, believe in keeping everything in cash). And, of course, there are the ones who just plain outspend what they make.
Over a lifetime of earning, I'd venture to say that at least 40-50% of the US population earns enough that they can hit a $1MM portfolio by retirement age. Half of them won't because of the issues above.
Average is only about 1500, in order to get the max you need to have been hitting the SS tax cap, or about 140k in todays bucks for an individual.
Formulas a bit goofy, but basically right now you get 1000 a month plus 1/3 (your monthly income - 1000). So if you averaged 50k(in today dollars for 35 working years), you'd get you about $2000 a month.
E: I will add that SS as part of retirement planning does tend to be ignored in a lot of places. Which is a mix of prudent planning-the boomers will never stop finding new ways to fuck us- and because of how their incentives work. If they can convince you you need to save $400 a month (which they make some % off of) they are better off than if you really would be good at $300 a month.
They do the same thing with your "needed income" for retirement, by pegging it to a % of your income. Change jobs and get a big raise, now there's no way you can retire on 60k a year-look at all the red under this chart-, you'll need 65k a year till you turn 99.
Yes, I don't disagree with any of that.
Or a baby boomer like my mom who was suckered by Madoff and has 0 retirement now. She's almost 70 and is still working.
Huh, that's a really interesting point I'd never considered before. Assuming a population of 330 million that puts the average US wealth at about $300k per person.
There are implications here for UBI as well. This implies that we're not rich enough as a nation to support an income of, say, $40k per person without the need for work. The theoretical maximum would be about $12k per person per year.
edit: According to estimations by Credit Suisse, the US has about 18.6 million millionaires. The US has 49.2 million residents above age 65.
As well there will still be folks buying, and by folks I mostly mean corps. Raising the interest rate significantly doesn't do anything except make the market even more ripe for corps to swing in, buy up all decent and halfway decent houses, for stupid prices, to rent them out and never sell them again (except to other corps). The interest rate is a lever we should not fuck with for the foreseeable future because it isn't gonna fix anything and will only exacerbate the much larger issues of the market.
You don't even have to be suckered.
My MIL had a reasonable 401k saved up and most of her debt paid off. But then lost her job in 2007 when the steel plant she managed deliveries for downsized. She was out of work for ~3 years and lived off hardship withdraws until she could get a new job.
But while of course circumstances can change and bad luck can happen, I think a lot more than the 1%ers can have a reasonable expectation of a fairly pleasant retirement.
Not nearly as many as should, granted, but a lot comes down to what you consider a comfortable / pleasant retirement.
Yes, because idiots have been in charge for a long time and they lowered this rate when they absolutely shouldn't have been doing so. Unfortunately that caused a lot of problems that need to be directly fixed before this rate is increased in any meaningful way again because increasing it before those problems are fixed will result in little but a further concentration of wealth.
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that's right we're on a fucked up cruise / God is dead but at least we have booze
bad things happen, no one knows why / the sun burns out and everyone dies
Not saying the conclusion are wrong, but this math is a bit problematic. The 1mm is at time of retirement, and the 40k assumes basically a "don't touch your principle" levels of conservativeness.
If you need 1MM at 65, you don't need 1MM at 78, because you are 13 years closer the great bear market in the sky. And if you assume a couple % points of burn down, you don't quite need 1MM dollars.
Time is the great variable with all this stuff.
I forget who, but someone recently proposed a "birthright" fund, which was basically the USGov funding a 10k IRA for every newborn, which would be worth about 1MM at 65, assuming 7% growth.
No one on a fixed rate would get affected, it would simply shift demand inward over the short-term which would lessen the increase in housing costs over that same period.
So on the one hand. The magic of compound interest makes that a great idea. On the other hand, that's a fucking terrible idea because there is zero chance that money makes it there instead of being treated as a great big pile of funny money by investors
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That seems like a very convoluted way to avoid the obvious solution of just increasing Social Security payouts. Which is a birthright for most 65 year old Americans anyway.
35% top marginal rate is absurdly low.
Doesn't just removing the $140kish individual FICA cap flip most everything black / extend solvency projections for Social Security by decades?
Edit - and then if you treat capital gains as normal income subject to FICA / Medicare taxes all the problems go away forever.