The Money Mustache Community
Around the Internet => Antimustachian Wall of Shame and Comedy => Topic started by: gpyros85 on May 16, 2018, 08:09:31 PM
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Guess it is breaking the internet by saving 2x your salary.
http://www.businessinsider.com/how-much-money-saved-by-age-35-experts-2018-5?IR=T
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I've seen this and the inevitable outpouring of woe on Twitter that followed. Possibly my favourite response was this:
This is such an irresponsible sentiment that entirely decontextualizes the sociopolitical forces that make this impossible for *most* people and instead makes them internalize the myth that somehow they’re not working hard enough
As an "upper millenial" (I turn 35 later this year*) I kind of hate the way that we blame our individual situation on globally out-of-our-control issues like sociopolitical forces, rather than focusing on our sphere of influence and control. A more logical response would be "I'm some way off that, but I can see the need to up my retirement savings now - I'll look at my budget closely to see how I can close this gap". Maybe I'm not working hard enough, or there is an opportunity to do something on the side that will increase my net worth. I wasn't born a mustachian so needed to figure this out myself, and worked to close the gap over a number of years, starting at 29.
An illogical response is "Waa, waa! *Crying* Sociopolitics! Global recession! College fees! Bitcoin! Baby boomers stealing our money and future! I can't do this and drive a F150 truck! Macroeconomics!"
Even if the deck isn't as favourable as it was for our elders (which I think is an argument with some validity), what will we do differently? Burying your head in the sand and crying doesn't seem to achieve much.
* And yes, I do have >2x salary saved for retirement already
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I really dislike when people use the "breaks/broke the internet" line. I don't even know why but it just irks me to no end.
Yeah, it used to be that you had to type "google " into Google to do that, now everybody thinks they can "break the internet " with pictures of their butt.
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Agreed, tedious statement
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I'm laughing at this guy: "How do you save anything when you make under $10 an hour? Even in the 80s." Because I went to college in the late '80s, and my mom was making around $20K/yr, which if you do the math is basically $10/hr, as a college professor. And she still managed to save for her retirement and put enough away for my college to cover the expected parental contribution. $10 in the '80s was an ok amount of money -- not rich by any means, but minimum wage was $3.35! (I know, because that's what I got paid! When I went to work as a Kelly Girl and made $5/hr, it was freaking awesome.)
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I agree that this saying is quite annoying but back to the topic.
It is amazing how seemingly proud people are to say how poor they are by not being appropriately prepared/preparing for retirement while simultaneously trying to keep up with the Jones' by purchasing everything under the sun. I cannot understand how people are so quick to state publicly that they have no savings, retirement, or both but yet people find it taboo to talk about how much money they make or to be open to talk about what/how to change to correct the issue. These articles and subsequent comment pages are infuriating to me as it seems that our society (USA) is continuing down the path of celebrating idiocy in all forms such as this with finances or intelligence by proudly stating that they don't read. I don't get, do you not see that you seem ridiculous?
/end rant
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I'm laughing at this guy: "How do you save anything when you make under $10 an hour? Even in the 80s." Because I went to college in the late '80s, and my mom was making around $20K/yr, which if you do the math is basically $10/hr, as a college professor. And she still managed to save for her retirement and put enough away for my college to cover the expected parental contribution. $10 in the '80s was an ok amount of money -- not rich by any means, but minimum wage was $3.35! (I know, because that's what I got paid! When I went to work as a Kelly Girl and made $5/hr, it was freaking awesome.)
Triple the minimum wage has always allowed a person to live a modest life and support themselves or even a small household almost everywhere in North America. There may not be a McMansion or a fancy new Suburban Assault Vehicle on the menu, but a 2-bedroom apartment and a bus pass or economy car is more than feasible, and saving for a condo or small house is possible in all but the highest COL areas. For those who have children or dependents there's some tax relief and even a few subsidies available.
More money equals more options and fancier choices, obviously.
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The real problem isn't that people aren't making it to 2x salary by 35, it's that they're not even remotely close. I bet 1x salary by 35 is even a daunting task for most Americans
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LOL at all those "how can I save 2x my salary when my salary is so small?" comments. If you make less money, 2x salary is proportionally as easy/difficult as saving 2x when you make a lot. Arguably harder because of meeting basic needs, but also arguably easier because of much lower taxes.
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LOL at all those "how can I save 2x my salary when my salary is so small?" comments. If you make less money, 2x salary is proportionally as easy/difficult as saving 2x when you make a lot. Arguably harder because of meeting basic needs, but also arguably easier because of much lower taxes.
Yeah, the people who actually have it the hardest are the ones who got a huge raise at age 34.
I hate the metric of X times your salary because it completely ignores your savings relative to expenses.
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LOL at all those "how can I save 2x my salary when my salary is so small?" comments. If you make less money, 2x salary is proportionally as easy/difficult as saving 2x when you make a lot. Arguably harder because of meeting basic needs, but also arguably easier because of much lower taxes.
I like how you laugh at them then refute your own assertion that saving is proportionally easy. What's paid in taxes, especially around median income levels, doesn't start to cover the cost of living portion. In 2017 a person moving from $30k income to $60k income would have paid about $3333 more in total tax while earning $30k more. Your tax difference only evens out your savings rate with more income if your basic needs are about $275 per month. Less than that you save less as a percentage due to taxes, more than that you save more.
And $3500 was half the ERE budget back when healthcare wasn't as dumb as it is today, so yeah, not buying your proportionally easy argument here.
Which isn't to say that anybody can't save. It's just recognizing that the higher your income, the easier it is.
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The real problem isn't that people aren't making it to 2x salary by 35, it's that they're not even remotely close. I bet 1x salary by 35 is even a daunting task for most Americans
1x salary by age 35 is less than 10% savings/year before matching or investment gains which is the commonly accepted minimum that nobody disagrees with for age 65 retirement. If the article said "save 10%" the Twitterverse wouldn't have complained, but if the article said "save 1x salary in 10 years" you would have seen the same responses.
I've seen this and the inevitable outpouring of woe on Twitter that followed. Possibly my favourite response was this:
This is such an irresponsible sentiment that entirely decontextualizes the sociopolitical forces that make this impossible for *most* people and instead makes them internalize the myth that somehow they’re not working hard enough
Holy needlessly lengthy syllables Batman!
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I'm in the core Millennial range typically mentioned in articles like this -- I graduated college in 2008.
On an $18k income, you would need to have $36k by 35 according to that rule. Let's assume I started saving at 25 (a few years out from college) and let's say I plonked my money into a high yield savings account, which is frankly far more likely for someone living right above poverty than investing it into index funds. For 10 years, I would have to put about $3.2k a year into savings, leaving me at annual spending of $14.8k -- very, very close to the federal poverty line. This assumes that you don't need to do something like spend $2k on dental surgery, thereby depleting over half a year's savings in one go.
If I had put it into index funds, I would have needed to save about $1.8k a year to have $36k by 35. That is more doable (leaves you with $16k to live on), but again: When your entire asset pool is $36k, you typically don't feel like risking it in the stock market. If you decided to do the sensible thing, and build up a good emergency fund and then invest (say $9k in an emergency fund, the rest in stocks), you'd be somewhere in between those two levels. (I'm too lazy to do the math right now.)
In grad school, getting a degree that has given me some real career opportunity, I lived on $18k in a HCOLA for six years. I paid my bills, and I paid off the interest that accumulated on my one private student loan (the others were all, blessedly, subsidized loans). I shared a big house with other people, and I didn't have a car. I was in good health, so I lived decently comfortably. I always had a thousand or two in savings, but I was not looking towards retirement. It definitely felt like a joke to me -- how was I to save the huge amounts I supposedly needed, when I'd be living even closer to the bone to do so? I did the calculators and they made me actually straight up cry. I felt like I could never get ahead, because every time I saved anything something else came along to take it away (hi that $2k dental surgery). I read personal finance blogs, and I tried, but every time -- boom. There went my hard savings. It was frustrating, and I felt like a failure. I desperately wanted to feel financially secure, to not worry anymore, and it was always out of reach. (And again, this is as a grad student; I knew it would change some day. Imagine not having that security backing you up.)
So, yeah, I get it when people get angry that they're told they should take their just-above-poverty incomes and move to a poverty-line life in order to meet some arbitrary rule. In 2010, 1 in 4 US households made under $25k a year. That's households, not just individuals. That's a lot of people who are already in a tight spot, and saving for retirement makes that feel even tighter. Should people still save, and try to raise their income? Gosh, yes. There is so much power in frugality and financial security. Do we still have it better here in the US, even at poverty level, than many people in the rest of the world? Gosh, yes. But I get why people are pissed at "rules" like that when so much already has to go to rent and making sure the toddler eats. When buying a new pair of shoes at Target to replace a broken pair is a decision to agonize over, being told that you're fucking it up makes you hurt, and then it can make you mad. Because whether to buy a $20 pair of shoes to replace ones with holes in the soles should not be an agonizing decision for anyone.
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Not only are articles like that discouraging, they're also probably wrong for low income individuals. The higher your income, the smaller percentage of social security that income will replace. While I don't expect that benefit levels will remain the same throughout my lifetime, I do expect that people will continue to get some sort of retirement income from the federal government, especially those at the lower end of the asset scale. So, if you've lived on minimum wage your whole life, you're probably going to continue to be in a similar financial situation if you reach age 70 and have to live off of social security alone.
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The real problem isn't that people aren't making it to 2x salary by 35, it's that they're not even remotely close. I bet 1x salary by 35 is even a daunting task for most Americans
1x salary by age 35 is less than 10% savings/year before matching or investment gains which is the commonly accepted minimum that nobody disagrees with for age 65 retirement. If the article said "save 10%" the Twitterverse wouldn't have complained, but if the article said "save 1x salary in 10 years" you would have seen the same responses.
I don't know if people would've reacted the same way to saving 1x salary, or if that reaction would've been substantially different to being told they should save 7-10%. Interesting psychological experiment. However, regardless of whether 10% is the accepted minimum that nobody disagrees with, not that many Americans actually save that much.
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Because whether to buy a $20 pair of shoes to replace ones with holes in the soles should not be an agonizing decision for anyone.
On the surface I get the sentiment that expresses: the whole point of civilization is that it's easier to get by together than it is alone. Society involves some give-and-take that means I both accept some degree of responsibility for my neighbor's welfare, and, s/he accepts some responsibility for mine.
The problem, of course, is how to operationalize it. There are at least a dozen contributors to financial standing, including things we have no control over (parentage), things we have some control over (health, educational attainment) and things we do control (what type of jobs we apply for, what hours we're willing to work).
If we, collectively, could agree to hit an economic reset button together - take all the money in the country, divide it equally among all the people - a year from now, some would have made more money, and some would have lost what they had. Do we then hit reset again?
If this comment was only meant to be an idealized, know-it-can't-ever-happen remark, so be it, I agree with you. But if this was intended to inform public policy, how would we go about making that happen?
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Because whether to buy a $20 pair of shoes to replace ones with holes in the soles should not be an agonizing decision for anyone.
On the surface I get the sentiment that expresses: the whole point of civilization is that it's easier to get by together than it is alone. Society involves some give-and-take that means I both accept some degree of responsibility for my neighbor's welfare, and, s/he accepts some responsibility for mine.
The problem, of course, is how to operationalize it. There are at least a dozen contributors to financial standing, including things we have no control over (parentage), things we have some control over (health, educational attainment) and things we do control (what type of jobs we apply for, what hours we're willing to work).
If we, collectively, could agree to hit an economic reset button together - take all the money in the country, divide it equally among all the people - a year from now, some would have made more money, and some would have lost what they had. Do we then hit reset again?
If this comment was only meant to be an idealized, know-it-can't-ever-happen remark, so be it, I agree with you. But if this was intended to inform public policy, how would we go about making that happen?
There have been some significant experiments with leveling over the years, such as:
- the French Revolution and its aftermath, when people who had become wealthy due to the pseudo-feudal aristocratic system (and many wealthy merchants as well) were executed, and their wealth divided among others
- the Bolshevik Rebellion and the early days of the USSR, in which there was a mass redistribution of wealth from the rich to the poor, with factory owners and richer "kulak" farmers not necessarily executed but definitely stripped of most of their assets
- the forcible redistribution of wealth (especially real estate) in Nazi controlled parts of Europe, from Jewish people, educators, gay people, and anyone else who was rounded up and sent to the gas chambers, so that other people could have "lebensraum" or "living room"
- the massive land acquisition of former First Nation lands during the westward US expansion, through the "claim" system of farming wherein anyone who happened to be male, white, and over the age of 21 was given the right to claim 160 acres (a quarter section) of land for farming purposes, provided of course that the land was not claimed by any other white male people over the age of 21
None of these appear to have produced permanent similarity of wealth, and in fact there was a substantial short-term setback in productivity even when the resources lost by the dispossessed people were not factored in. Some economies recovered; others did not. Equality (or near-equality) of opportunity does not produce equality of result. If equality of result is a social or economic goal it must be accomplished by some other means besides the redistribution of means of production.
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Because whether to buy a $20 pair of shoes to replace ones with holes in the soles should not be an agonizing decision for anyone.
On the surface I get the sentiment that expresses: the whole point of civilization is that it's easier to get by together than it is alone. Society involves some give-and-take that means I both accept some degree of responsibility for my neighbor's welfare, and, s/he accepts some responsibility for mine.
The problem, of course, is how to operationalize it. There are at least a dozen contributors to financial standing, including things we have no control over (parentage), things we have some control over (health, educational attainment) and things we do control (what type of jobs we apply for, what hours we're willing to work).
If we, collectively, could agree to hit an economic reset button together - take all the money in the country, divide it equally among all the people - a year from now, some would have made more money, and some would have lost what they had. Do we then hit reset again?
If this comment was only meant to be an idealized, know-it-can't-ever-happen remark, so be it, I agree with you. But if this was intended to inform public policy, how would we go about making that happen?
It was definitely intended as an idealized comment -- "people shouldn't have to agonize over replacing cheap shoes" would be a terrible public policy proposal. ;)
To derail the thread for a moment:
Historically -- like waaaaay waaaaay back -- people did just what you said: They hit the reset button, over and over. This is the jubilee mentioned in the Bible, and to a lesser extent the Sabbath years were also a reset button. Revolutions (a particularly violent way to hit the reset button) almost always have, very early on, a destruction of debt records, and the following re-allocation of property. This happens, over and over, because as you said -- disparity increases quickly, and seems to do so across cultures and time periods.
If you don't want the reset button, there's a lot of smaller ways to reduce income inequality, which usually focus around making a more progressive tax code, investing more heavily in education, a higher minimum wage, enacting policies that strongly encourage lower-income families to build wealth, etc. It doesn't fix the problem fully; I don't think we'll ever do that. But we can do our best to make it better.
I will now pull myself back on topic -- I think the fact that we don't do a ton (at least in comparison to other nations) to ameliorate income inequality is a huge reason why you see these discussions on Twitter about sociopolitical reasons for not savings. The anger doesn't come out of nowhere (even if it's still self-sabotaging not to save/prepare for future security at all).
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Because whether to buy a $20 pair of shoes to replace ones with holes in the soles should not be an agonizing decision for anyone.
If we, collectively, could agree to hit an economic reset button together - take all the money in the country, divide it equally among all the people - a year from now, some would have made more money, and some would have lost what they had. Do we then hit reset again?
If this comment was only meant to be an idealized, know-it-can't-ever-happen remark, so be it, I agree with you. But if this was intended to inform public policy, how would we go about making that happen?
This feels like its either an egregious strawman or missing the point. We don't have to divide everything equally. We know that some people are better connected and better at playing the game than others. That inequality would return quickly even if removed once. But I don't get how you come to your stated conclusion that people having both shoes that aren't presently falling apart and some hope at saving for a modest, conventional retirement after 40+ years working is a know-it-can't-ever-happen situation.
We can perhaps agree that many wouldn't, even given the option, but it's a bit callous to write off everybody that isn't in a place to do so under the assumption that they wouldn't. And even if we're writing people off for bad decisions, there are numerous policies we can enact that would help many save adequately for retirement at practically no cost to society. A law requiring companies that offer a retirement savings plan to automatically enroll people at the level to get the company match with an option to opt-out would see contributions soar, like they have at companies that have voluntarily enacted such a policy. People end up being too lazy to opt-out, just like they're presently too lazy to opt-in.
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Historically -- like waaaaay waaaaay back -- people did just what you said: They hit the reset button, over and over. This is the jubilee mentioned in the Bible, and to a lesser extent the Sabbath years were also a reset button.
No it isn't. Biblical Jubilee (https://en.wikipedia.org/wiki/Jubilee_(biblical)#Regulations) was:
- A sabbatical year to let the land lie fallow.
- When all "purchased" (rented) property had to be returned to the original heirs.
- When all Israeli Indentured Servents' terms were up.
People weren't stupid, if it was only 10 years to the next Jubilee then the going rate for rented land and Indentured Servitude would adjust appropriately. In fact there is even an explicit command that the price of the land has to adjust depending on how many years there are till Jubilee (to keep people from taking advantage of foreigners / unaware people) (Leviticus 25:14-17).
None of those inherently "hit the reset button" or redistributed wealth. In fact the land ownership reversion (intentionally or unintentionally) directly opposes "letting people get ahead" as the land would only ever be owned by the heirs / originals / first-borns / aristocracy, and everyone else could only rent it from them, ultimately enriching and calcifying the upper class and decreasing social mobility (exactly like it did in aristocratic England or the Dark Ages).
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One voluntary form of leveling that worked well was the potlatch tradition: people who had "arrived" threw a giant party and gave away pretty much everything they owned except the most rudimentary necessities. It was a form of wealth redistribution but so far as I've ever heard or read it was voluntary. People generally didn't do it if they had dependent children or elders to support. It was a way of showing everyone that they had nothing to prove, and a way of helping out people in a very wide social circle as opposed to a few key family members who ended up getting gradually richer over time.
That doesn't mean there wasn't the occasional snide comment about whether Joe and Hilda were rich enough for their tastes, or whether they would hurry up and throw a potlatch already. I can't vouch for whether there were any unwritten rules about who should or shouldn't do a potlatch. I do know that the tradition was actively suppressed by the European settlers because it violated their values of wealth accumulation and it frightened them to see so many of the locals get together at once.
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I hadn't read about the potlatches of the pacific northwest before, your comment sent me down a fascinating rabbit hole, TheGrimSqueaker, thanks!
Because whether to buy a $20 pair of shoes to replace ones with holes in the soles should not be an agonizing decision for anyone.
If we, collectively, could agree to hit an economic reset button together - take all the money in the country, divide it equally among all the people - a year from now, some would have made more money, and some would have lost what they had. Do we then hit reset again?
If this comment was only meant to be an idealized, know-it-can't-ever-happen remark, so be it, I agree with you. But if this was intended to inform public policy, how would we go about making that happen?
This feels like its either an egregious strawman or missing the point. We don't have to divide everything equally. We know that some people are better connected and better at playing the game than others. That inequality would return quickly even if removed once. But I don't get how you come to your stated conclusion that people having both shoes that aren't presently falling apart and some hope at saving for a modest, conventional retirement after 40+ years working is a know-it-can't-ever-happen situation.
From a purely pragmatic point of view, making sure there is a reasonably stable "floor" for people's quality of life is a good way to reduce the risk of violent revolutions. That seems like a pretty valuable investment, particularly for the people who have the most money and power under the current system.
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Agreed, tedious statement
Guys Guys Guys! It was a joke, it didn't break the internet. I just read about it all the time on yahoo.com and thought I would continue it in joking manor!!!
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LOL at all those "how can I save 2x my salary when my salary is so small?" comments. If you make less money, 2x salary is proportionally as easy/difficult as saving 2x when you make a lot. Arguably harder because of meeting basic needs, but also arguably easier because of much lower taxes.
Yeah, the people who actually have it the hardest are the ones who got a huge raise at age 34.
I hate the metric of X times your salary because it completely ignores your savings relative to expenses.
Agreed this metric does not include this situation!
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Everyone is a victim.
My first job at 23 I was earning $45k a year which was pretty okay, but in a HCOL area. At 25, that jumped to $60k. At 28, that jumped to $80k and I stayed there for 10 years. By 30, our investments were sitting at $53k. At 34, we were at just over $200k which would have been more than double our income. So it's not impossible, but also not easy. Luckily, we had run out of things to buy so we just ended up saving without knowing that we were setting ourselves up for a very good situation today.
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There is a lot of truth to low incomes not being able to save a proportionate amount to their income.
A $70k earner does not have the ability to save twice as much as a $35k earner. They have an exponential ability to save more if everything else is the same.
The easiest example: $12k in rent or house expenses, $6k in food, $4k health insurance, 20% tax bracket, $5k everything else leaves $1k for the $35k earner.
The $70k earner would have $39k leftover. So literally 39 years of saving for the $35k earner to save as much as a $70k earner if all expenses are the same, not just double.
Don't knock my simplicity. I dislike posters who say "that number isn't right, or how do you spend that much money on food, the tax rate is wrong, etc". It's simple example to make a point. MOST people in America are not mustachians and they will push their budget to the limit like the $35k earner. Even just $5k or $10k more in income can make an exponential difference to saving rates if you don't have lifestyle creep.
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This rule is not realistic for everyone and can discourage people from saving, experts say.
Who are these experts?
Rules such as this one are too general to be applied to every individual, financial experts told INSIDER.
Yeah, of course it's a general rule, doesn't mean it doesn't apply to 90% of the population.
"There is no one right answer to any of this," he told INSIDER. "I think the big takeaway is that people need to save. If you aren't saving now, then you should start. If you are saving 10%, then you should save more, with a solid target being to save 20%+ of your annual gross income. If you shoot to do this or more each year, you will be in good shape."
Didn't someone above say 10% would get this done, but they're suggesting 20% trying to sound pragmatic.
Of course the problem with "saving 10%" vs "double income by 35" is if you're saving 10% each year, you can still put it all in a house or something and end at 0 by 30.
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Everyone is a victim.
My first job at 23 I was earning $45k a year which was pretty okay, but in a HCOL area. At 25, that jumped to $60k. At 28, that jumped to $ and I stayed there for 10 years. By 30, our investments were sitting at $53k. At 34, we were at just over $200k which would have been more than double our income. So it's not impossible, but also not easy. Luckily, we had run out of things to buy so we just ended up saving without knowing that we were setting ourselves up for a very good situation today.
Dude at 25yo(12+ years ago?) you were making more than the US median income. Guess what, it's easier to save when you make more. How difficult is that to understand?
Right, how tone deaf is that comment? Not just more than median income, more than median household income for a family of four. And at 25, when the median age of somebody in the workforce is 42. And despite low inflation, $60k in 2006 is still $75k in 2018 dollars.
Pretty sure a lot of the people upset today aren't complaining about their full time, $36 an hour jobs they got early in their career. It should be easy to save on that.
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Everyone is a victim.
My first job at 23 I was earning $45k a year which was pretty okay, but in a HCOL area. At 25, that jumped to $60k. At 28, that jumped to $ and I stayed there for 10 years. By 30, our investments were sitting at $53k. At 34, we were at just over $200k which would have been more than double our income. So it's not impossible, but also not easy. Luckily, we had run out of things to buy so we just ended up saving without knowing that we were setting ourselves up for a very good situation today.
Dude at 25yo(12+ years ago?) you were making more than the US median income. Guess what, it's easier to save when you make more. How difficult is that to understand?
Sure if you ignore the HCOL part. I don't know where he lived, but if it was NYC, the median there is $50k. The median in certain areas is over $100k. If he/she lived in Manhattan, he was making less than half the median.
https://project.wnyc.org/median-income-nabes/
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Everyone is a victim.
My first job at 23 I was earning $45k a year which was pretty okay, but in a HCOL area. At 25, that jumped to $60k. At 28, that jumped to $ and I stayed there for 10 years. By 30, our investments were sitting at $53k. At 34, we were at just over $200k which would have been more than double our income. So it's not impossible, but also not easy. Luckily, we had run out of things to buy so we just ended up saving without knowing that we were setting ourselves up for a very good situation today.
Dude at 25yo(12+ years ago?) you were making more than the US median income. Guess what, it's easier to save when you make more. How difficult is that to understand?
Sure if you ignore the HCOL part. I don't know where he lived, but if it was NYC, the median there is $50k. The median in certain areas is over $100k. If he/she lived in Manhattan, he was making less than half the median.
https://project.wnyc.org/median-income-nabes/
Is that an objection or an agreement? Even assuming NYC, they were making more than median household income in that area at 25, beating that median by about 30% on inflation adjusted numbers. And sure, Manhattan has higher incomes/costs than NYC as a whole, but you know that it's totally a choice to live there instead of other areas of NYC, even if you want to live in the city.
We should either be surprised that kork claims it wasn't easy, given the relative advantage, or acknowledge that it's extremely difficult for people without that advantage.
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Everyone is a victim.
My first job at 23 I was earning $45k a year which was pretty okay, but in a HCOL area. At 25, that jumped to $60k. At 28, that jumped to $ and I stayed there for 10 years. By 30, our investments were sitting at $53k. At 34, we were at just over $200k which would have been more than double our income. So it's not impossible, but also not easy. Luckily, we had run out of things to buy so we just ended up saving without knowing that we were setting ourselves up for a very good situation today.
Dude at 25yo(12+ years ago?) you were making more than the US median income. Guess what, it's easier to save when you make more. How difficult is that to understand?
Sure if you ignore the HCOL part. I don't know where he lived, but if it was NYC, the median there is $50k. The median in certain areas is over $100k. If he/she lived in Manhattan, he was making less than half the median.
https://project.wnyc.org/median-income-nabes/
Is that an objection or an agreement? Even assuming NYC, they were making more than median household income in that area at 25, beating that median by about 30% on inflation adjusted numbers. And sure, Manhattan has higher incomes/costs than NYC as a whole, but you know that it's totally a choice to live there instead of other areas of NYC, even if you want to live in the city.
We should either be surprised that kork claims it wasn't easy, given the relative advantage, or acknowledge that it's extremely difficult for people without that advantage.
It wasn't really either an objection or an agreement, it was I don't have enough information to draw a conclusion. You are most likely correct, but you have to make assumptions to get to any conclusions. It seemed like an attack on kork to me, and if you're attacking, make sure you understand the situation.
I agree that if you have an advantage it will be easier. I'm not sure how advantaged kork is/was. I have been super blessed/privileged.
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LOL at all those "how can I save 2x my salary when my salary is so small?" comments. If you make less money, 2x salary is proportionally as easy/difficult as saving 2x when you make a lot. Arguably harder because of meeting basic needs, but also arguably easier because of much lower taxes.
Yeah, the people who actually have it the hardest are the ones who got a huge raise at age 34.
I hate the metric of X times your salary because it completely ignores your savings relative to expenses.
LOL ^ this is me and I was going to comment on this. I got a huge pay bump around age 30 (my salary doubled) and another fairly significant bump at 33. I've just under 2x around my 37 bday but all of the sudden when I get my next raise I won't be 2x my salary anymore. It is a good problem to have :)
One just has to keep it in perspective.
However, it hasn't been easy to save that much and it has only been through continuous frugality (first by necessity and now we just make ourselves do it) for the last decade or so. If we hadn't had kids it would have been way easier.
I honestly don't expect everyone to be frugal enough to do it: it isn't fun, but it will be worth it.
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Everyone is a victim.
My first job at 23 I was earning $45k a year which was pretty okay, but in a HCOL area. At 25, that jumped to $60k. At 28, that jumped to $ and I stayed there for 10 years. By 30, our investments were sitting at $53k. At 34, we were at just over $200k which would have been more than double our income. So it's not impossible, but also not easy. Luckily, we had run out of things to buy so we just ended up saving without knowing that we were setting ourselves up for a very good situation today.
Dude at 25yo(12+ years ago?) you were making more than the US median income. Guess what, it's easier to save when you make more. How difficult is that to understand?
It's easier to save more when your expenses don't exceed your income. Really doesn't have much to do with how much you earn. I was just out with a colleague of mine who earns $8k a month after tax. He lives with his wife and child in their parents basement rent-free. He's a smart guy in his career, but not all the bright with money and expenses.
It's not easier for him to save at all... In fact, it's easier for him to spend because he doesn't need to count his nickels to eat out for dinner. He just assumed it's easily paid for because of a high income. He lives paycheck to paycheck.
The year before I got my full-time job I earned $12k (part-time minimum wage job) and got a $10k student loan. I still had the $10k from my student loan when I got my first "grown-up" job. I was living in my own place at 19 and graduated with tens of thousands in student debt. I "think" that as a result of hard work and dedication I was able to become an adult and work towards an adult job. This may be easier in Canada than the US, I don't know.
Those who are adults and earning minimum wage living paycheck to paycheck, I find I don't have much in common with so I can't comment on their situation. I was only sharing my own as it pertained to the article. Not adults complaining about minimum wage and not being able to save. I don't think I'm alone on THIS FORUM having a decent income and working towards FI by pushing hard and sacrificing.
If I became an adult with a minimum wage job and I wanted more, I'd figure out how to succeed and work towards it.
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Fuck ‘em. Fuck ‘em and their complainypants complaints.
There, now the internet is fixed.
(Get off my lawn!)
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Everyone is a victim.
My first job at 23 I was earning $45k a year which was pretty okay, but in a HCOL area. At 25, that jumped to $60k. At 28, that jumped to $ and I stayed there for 10 years. By 30, our investments were sitting at $53k. At 34, we were at just over $200k which would have been more than double our income. So it's not impossible, but also not easy. Luckily, we had run out of things to buy so we just ended up saving without knowing that we were setting ourselves up for a very good situation today.
Dude at 25yo(12+ years ago?) you were making more than the US median income. Guess what, it's easier to save when you make more. How difficult is that to understand?
Sure if you ignore the HCOL part. I don't know where he lived, but if it was NYC, the median there is $50k. The median in certain areas is over $100k. If he/she lived in Manhattan, he was making less than half the median.
https://project.wnyc.org/median-income-nabes/
Is that an objection or an agreement? Even assuming NYC, they were making more than median household income in that area at 25, beating that median by about 30% on inflation adjusted numbers. And sure, Manhattan has higher incomes/costs than NYC as a whole, but you know that it's totally a choice to live there instead of other areas of NYC, even if you want to live in the city.
We should either be surprised that kork claims it wasn't easy, given the relative advantage, or acknowledge that it's extremely difficult for people without that advantage.
It wasn't really either an objection or an agreement, it was I don't have enough information to draw a conclusion. You are most likely correct, but you have to make assumptions to get to any conclusions. It seemed like an attack on kork to me, and if you're attacking, make sure you understand the situation.
I agree that if you have an advantage it will be easier. I'm not sure how advantaged kork is/was. I have been super blessed/privileged.
I lived in the most HCOL city in Canada at the time I got my first adult job. Average family income at the time was well over $100k/year. So my salary was around 1/3 what the average was in my city.
ADDED - Just researched it and average household (can't fine median) income today in that city of a population of 200,000 is $163,752/year.
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There is a lot of truth to low incomes not being able to save a proportionate amount to their income.
"There is no one right answer to any of this," he told INSIDER. "I think the big takeaway is that people need to save. If you aren't saving now, then you should start. If you are saving 10%, then you should save more, with a solid target being to save 20%+ of your annual gross income. If you shoot to do this or more each year, you will be in good shape."
Didn't someone above say 10% would get this done, but they're suggesting 20% trying to sound pragmatic.
Of course the problem with "saving 10%" vs "double income by 35" is if you're saving 10% each year, you can still put it all in a house or something and end at 0 by 30.
If you assume someone started working at age 25, with 10 years of static income, it would require a savings rate of 20% per year (not including market gains/losses) to accumulate 2x salary by 25. If one started five years earlier at age 20, it drops down to 13%.
It is just a truth that it is much, much fucking harder for people with low incomes to save 13%-20% of their income. I'm not talking about middle class people who are paycheck to paycheck because they bought too much house or always upgrade their iPhones, but I think it's good for us on this forum to remember that there are millions of actually poor people in America, who scrupulously track where every penny is going because every penny is needed for survival. It is also true that a lot of the reasons that lead to people being poor are either out of their control or very difficult to control (and that it is HEAVILY correlated with race and gender in the United States). It makes me angry when this forum reductively calls all people who haven't saved enough complainers. Some are, to varying degrees, but the fact that some people erroneously think of themselves as victims does not mean that victims of the system do not exist.
BUT, it is also true that many of the people raging on the internet about this could be saving more than they do now. Furthermore, I just don't understand the POINT of their outrage. Pointing out the unfairness in the system does little to nothing to correct it. Righteous indignation will not pay for your retirement. It can be both true that saving 2x one's salary is very very hard for many people for many reasons, and that people ought to do as much as they reasonably can to try to do it anyway, because fair or not, one's elderly years are coming regardless.
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I saw all the Twitter outrage about this article too. One of my favorites was the guy who angrily said, (https://twitter.com/CohibaSmkr/status/996441320444047361) "Marketwatch isn't living in the real world" and went on to say: "Think of how these folks lived to sock away that much cash? They probably never dine out. Never go on vacation. What kind of life is that?" (What kind of life, indeed?)
Obviously, Twitter is a biased sample. People who read this article and think, "Yep, sounds about right" aren't going to speak up. The people most motivated to comment are the ones who get angry and insist no one with student loans or rent can do this. Lots of them had their own reasons why they can't save, and hell, some are probably telling the truth. As other posters have said, it's a lot harder to save anything when you're near the poverty line, even if you're frugal. I'm all in favor of a robust social safety net to put a floor under the poorest members of our society.
But I'm sure there are a lot of people who could save more than they currently are. If you get upset and defensive and dismiss the idea out of hand, there's no need to reexamine your life and see if you're spending wastefully, or if you're making poor career choices that are causing you to underperform your earning potential.
The Marketwatch author wrote a followup (https://www.marketwatch.com/story/want-to-make-millennials-mad-talk-about-saving-for-retirement-2018-05-16) about why this makes people so upset. She's pretty calm about it, all things considered.
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There is no limit of stupidity in this world.
I love how people harp about the example of someone making $55k annually at the age of 25 as if it is impossible. Ok, let's pretend it is and use the example of someone making $25k annually. If they receive 2% increases then they'll be making a little over $30k annually at the age of 35 and should have $60 saved.
If someone invested 10% of their income at the age of 25 (so $2500) and kept investing 10% annually and receiving a 10% return, they would have about $50k at the age of 35, which while less than double their salary, is still good. They'll have more than double their salary by the age of 37 and by the age of 50 they'll have about $300k saved up on an income of $41k.
So long story short, people should talk less and invest more.
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I think everyone is arguing from different angles. 2x salary by 35 may be difficult on lower salaries but I'd bet plenty of the complainers are more capable than they realize. As someone else mentioned, it's typically the people who take it personally and get defensive that care enough to comment.
All I want to add is that I think it's an arbitrary rule. Sort of like the rule that you need to replace 80% of your income in retirement. Maybe a "save x times your annual expenses by age 35" rule would be more useful.
Speaking of which, any thoughts on what x should be at 35?
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These are the figures I'm looking to achieve personally - making more and more annually as time goes on of course! Currently 24, making 55k living frugally but not overly so:
25 – 1x salary
30 – 2x salary (3x stretch goal)
35 – 4x (5x stretch goal)
Continue saving at that rate and let compounding work its magic!
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I don't understand how this generation survives the world being as "sensitive" as they are, though I suppose I'm one of them being only 2 yrs older. The original Fidelity guidelines of 1x at 30, 2x at 35 etc have been around for a while, and they're not a criticism but a GUIDELINE. Yet I'm been following the drama on Twitter and these 25-35 year olds are freaking out and coming up with every excuse in the book and acting like a financial company has personally criticized them.
I love some of the drama -- OMG older people just don't understand because they had jobs handed to them and homes cost nothing and they didn't deal with a recession. Um there were recessions in the 80s; I remember being a kid in a down/recessionary economy in the early 90s; totally remember the post 9-11 recession; and of course the great recession. There have been articles for years about how if you graduate in a recession (those articles talked about early 80s, 90s and 00s grads) you end up 10s of thousands behind your peers who didn't graduate in a recession -- bc of job loss; opportunity cost of not working or investing even for a year and then the amount of time after it takes you to get back on a professional track. We get it -- you have it bad. You aren't the one ones in modern American history though!?
Plus they are GUIDELINES. If they apply to you, great. If they don't, well then save/invest what you can and keep chipping away at it and do your best. I don't get the point of the toddler act happening on Twitter -- OMG this depresses me so much I'm not even gonna try (ok so don't -- won't hurt anyone else); or my retirement plan is a guillotine (dramatic much?!).
I certainly did not have 1x income at age 30 for various reasons -- graduated law school at 25; federal clerk for a yr with no retirement plan (and was too naïve to know I could do an IRA); started investing at 26 in 2006 and 2 yrs later 08-09 happened, job loss etc. Yet I kept plugging away. Didn't hit 1x income until age 35. Then pleasantly surprised to hit 2x at 37.5 -- bc of a job with an 8% match and a booming market. I'm sure I'll be a bit delayed on 3x too. Yet if I had taken my toys and gone home at 30, I may have been sitting on 50k in retirement some 7 yrs later.
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I don't understand how this generation survives the world being as "sensitive" as they are, though I suppose I'm one of them being only 2 yrs older. The original Fidelity guidelines of 1x at 30, 2x at 35 etc have been around for a while, and they're not a criticism but a GUIDELINE. Yet I'm been following the drama on Twitter and these 25-35 year olds are freaking out and coming up with every excuse in the book and acting like a financial company has personally criticized them.
Well, to be fair, my generation also ranted and raved about how the Boomers had screwed everything up for us, and the Boomers sure ranted and raved about how their parents screwed everything up for them. We just didn't have Twitter to broadcast our entitled inanity worldwide every time some dumb-ass thought came into our heads.
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I'm in the core Millennial range typically mentioned in articles like this -- I graduated college in 2008.
On an $18k income, you would need to have $36k by 35 according to that rule. Let's assume I started saving at 25 (a few years out from college) and let's say I plonked my money into a high yield savings account, which is frankly far more likely for someone living right above poverty than investing it into index funds. For 10 years, I would have to put about $3.2k a year into savings, leaving me at annual spending of $14.8k -- very, very close to the federal poverty line. This assumes that you don't need to do something like spend $2k on dental surgery, thereby depleting over half a year's savings in one go.
If I had put it into index funds, I would have needed to save about $1.8k a year to have $36k by 35. That is more doable (leaves you with $16k to live on), but again: When your entire asset pool is $36k, you typically don't feel like risking it in the stock market. If you decided to do the sensible thing, and build up a good emergency fund and then invest (say $9k in an emergency fund, the rest in stocks), you'd be somewhere in between those two levels. (I'm too lazy to do the math right now.)
In grad school, getting a degree that has given me some real career opportunity, I lived on $18k in a HCOLA for six years. I paid my bills, and I paid off the interest that accumulated on my one private student loan (the others were all, blessedly, subsidized loans). I shared a big house with other people, and I didn't have a car. I was in good health, so I lived decently comfortably. I always had a thousand or two in savings, but I was not looking towards retirement. It definitely felt like a joke to me -- how was I to save the huge amounts I supposedly needed, when I'd be living even closer to the bone to do so? I did the calculators and they made me actually straight up cry. I felt like I could never get ahead, because every time I saved anything something else came along to take it away (hi that $2k dental surgery). I read personal finance blogs, and I tried, but every time -- boom. There went my hard savings. It was frustrating, and I felt like a failure. I desperately wanted to feel financially secure, to not worry anymore, and it was always out of reach. (And again, this is as a grad student; I knew it would change some day. Imagine not having that security backing you up.)
So, yeah, I get it when people get angry that they're told they should take their just-above-poverty incomes and move to a poverty-line life in order to meet some arbitrary rule. In 2010, 1 in 4 US households made under $25k a year. That's households, not just individuals. That's a lot of people who are already in a tight spot, and saving for retirement makes that feel even tighter. Should people still save, and try to raise their income? Gosh, yes. There is so much power in frugality and financial security. Do we still have it better here in the US, even at poverty level, than many people in the rest of the world? Gosh, yes. But I get why people are pissed at "rules" like that when so much already has to go to rent and making sure the toddler eats. When buying a new pair of shoes at Target to replace a broken pair is a decision to agonize over, being told that you're fucking it up makes you hurt, and then it can make you mad. Because whether to buy a $20 pair of shoes to replace ones with holes in the soles should not be an agonizing decision for anyone.
Thanks so much for sharing this. This really lines up with my experience as well. It was not that many years ago that I wore shoes with holes in the bottom all summer because shelling out the $25-$30 for new (crappy) shoes seemed like Too Much My Contract Is Up That's A Week Of Groceries. I also cried over retirement calculators while I was in grad school lol! It just seemed completely impossible. Thankfully I then decided that even if I could never retire, I could beef up that emergency fund so when I graduated I wouldn't be out on the street before I found a job, and that worked out pretty well. And it's felt like clawing my way up until I started getting programmer money. Even though the non-programmer money was as much as some folks made as a household, it still felt like a stretch a lot of the time. I played a lot of 'savings chicken', and thankfully won, but it was stressful and not actually that easy or simple.
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What's interesting to me in this situation is the steep trajectory of my salary (and my wife's) up until now. I've tripled my salary in the last 10 years. I've doubled it in the last 5. Gone up $30k in the last three years. So if you want to use the metric of my salary at 25, sure, I'm way ahead of the game. But my current salary, no, I'm not there because I simply haven't been at this income level for a long enough time to reap the rewards from it. It's closer if you use the equity in my houses (even including the one I bought in 2008 that absolutely tanked after purchasing it). I've also spent a considerable amount of money setting myself up for future rewards; purchasing 2 houses (1 rental) was cash intensive, and from 30 to now I've paid a fair amount of my take home for childcare for two young children. Now that those two major hurdles are mostly behind me, I can save a greater percentage of my now-high salary.
This is one of the things that bugged me in Millionaire Next Door, it assumed a relatively stagnant level of income. (made up numbers) Someone who started out at $50k at 25 and is now 35 and has $100k saved is doing relatively well; someone who started at $50k at 25 and is now 35 and is now at $150k with $200k saved is not doing as well even though he maybe was making $120k the year before and $100k the year before, simply because he has a lower multiple of his salary accumulated.
Not making excuses, but I do think sometimes that some of these games make those with a good career trajectory ahead of them feel left behind simply because their wealth accumulation isn't quite as steep as their salary growth.
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This is one of the things that bugged me in Millionaire Next Door, it assumed a relatively stagnant level of income. (made up numbers) Someone who started out at $50k at 25 and is now 35 and has $100k saved is doing relatively well; someone who started at $50k at 25 and is now 35 and is now at $150k with $200k saved is not doing as well even though he maybe was making $120k the year before and $100k the year before, simply because he has a lower multiple of his salary accumulated.
The Millionaire Next Door has a lot of problems.
The equation from that book is fundamentally broken because the author tried to fit a straight line to the inherently an exponential process of accumulating savings/investments. (Both as a result of pay raises and compounding investment returns of prior savings.)
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This is one of the things that bugged me in Millionaire Next Door, it assumed a relatively stagnant level of income. (made up numbers) Someone who started out at $50k at 25 and is now 35 and has $100k saved is doing relatively well; someone who started at $50k at 25 and is now 35 and is now at $150k with $200k saved is not doing as well even though he maybe was making $120k the year before and $100k the year before, simply because he has a lower multiple of his salary accumulated.
The Millionaire Next Door has a lot of problems.
The equation from that book is fundamentally broken because the author tried to fit a straight line to the inherently an exponential process of accumulating savings/investments. (Both as a result of pay raises and compounding investment returns of prior savings.)
The math is only reasonably believable at around age 55, for jobs and professions where the income doesn't increase exponentially. The emphasis is on blue-collar jobs and businesses, or very specific professions, for a reason.
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I'm laughing at this guy: "How do you save anything when you make under $10 an hour? Even in the 80s." Because I went to college in the late '80s, and my mom was making around $20K/yr, which if you do the math is basically $10/hr, as a college professor. And she still managed to save for her retirement and put enough away for my college to cover the expected parental contribution. $10 in the '80s was an ok amount of money -- not rich by any means, but minimum wage was $3.35! (I know, because that's what I got paid! When I went to work as a Kelly Girl and made $5/hr, it was freaking awesome.)
I made $3.25 an hour in 1986. My job affected my grades, so I dropped it rather than lose my scholarship (Alberta Heritage Scholarship fund) given to everyone of highschool age who had an 80% average that year.
And for those of you who don't know what Alberta is, it's like Texas. Only bigger.
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I'm laughing at this guy: "How do you save anything when you make under $10 an hour? Even in the 80s." Because I went to college in the late '80s, and my mom was making around $20K/yr, which if you do the math is basically $10/hr, as a college professor. And she still managed to save for her retirement and put enough away for my college to cover the expected parental contribution. $10 in the '80s was an ok amount of money -- not rich by any means, but minimum wage was $3.35! (I know, because that's what I got paid! When I went to work as a Kelly Girl and made $5/hr, it was freaking awesome.)
I made $3.25 an hour in 1986. My job affected my grades, so I dropped it rather than lose my scholarship (Alberta Heritage Scholarship fund) given to everyone of highschool age who had an 80% average that year.
And for those of you who don't know what Alberta is, it's like Texas. Only bigger.
Don't tell a Texan that. Them fight'n words.
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I'm laughing at this guy: "How do you save anything when you make under $10 an hour? Even in the 80s." Because I went to college in the late '80s, and my mom was making around $20K/yr, which if you do the math is basically $10/hr, as a college professor. And she still managed to save for her retirement and put enough away for my college to cover the expected parental contribution. $10 in the '80s was an ok amount of money -- not rich by any means, but minimum wage was $3.35! (I know, because that's what I got paid! When I went to work as a Kelly Girl and made $5/hr, it was freaking awesome.)
I made $3.25 an hour in 1986. My job affected my grades, so I dropped it rather than lose my scholarship (Alberta Heritage Scholarship fund) given to everyone of highschool age who had an 80% average that year.
And for those of you who don't know what Alberta is, it's like Texas. Only bigger.
Don't tell a Texan that. Them fight'n words.
I have been summoned.
Actually had a friend from Calgary when I was in graduate school. He was basically like me, but didn't suffer during Chicago winters because he'd learned to keep himself sane by thinking in Celsius.
As far as land area: Alberta measures 661,848 km^2, Texas measures 696,200 km^2, so Texas is actually still bigger by 5% or so. I'm as surprised as you, but it must be because those maps distort places in the North so much that we all think Canadian provinces are so big.
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I'm as surprised as you, but it must be because those maps distort places in the North so much that we all think Canadian provinces are so big.
They are. Alberta is about average. Same as Saskatchewan, and Manitoba. Ontario, Quebec, BC, Nunavut, and the North West Territories are all larger.
1 Nunavut 2,093,190
2 Quebec 1,542,056
3 Northwest Territories 1,346,106
4 Ontario 1,076,395
5 British Columbia 944,735
6 Alberta 661,848
7 Saskatchewan 651,036
8 Manitoba 647,797
9 Yukon 482,443
10 Newfoundland and Labrador 405,212
11 New Brunswick 72,908
12 Nova Scotia 55,284
13 Prince Edward Island 5,660
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American States (by total area):
Alaska: 1,723,337 km^2
Texas: 695,662 (this is a different source)
California: 423,972
Montana: 380,831
New Mexico: 314,917
Arizona: 295,234
interestingly, there are 11 more states that exceed 200,000 km^2 in area. New Brunswick would rank 41st if it somehow became a US state, which I cannot imagine, because from everything I've hear, the party never stops there.
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American States (by total area):
Alaska: 1,723,337 km^2
Texas: 695,662 (this is a different source)
California: 423,972
Montana: 380,831
New Mexico: 314,917
Arizona: 295,234
interestingly, there are 11 more states that exceed 200,000 km^2 in area. New Brunswick would rank 41st if it somehow became a US state, which I cannot imagine, because from everything I've hear, the party never stops there.
I rode through New Brunswick in 1995 and thought it was the most beautiful place I'd ever seen.
The Canadian Maritime provinces are quite small because the political boundaries were drawn up before major travel infrastructure was really a "thing". I see a similar phenomenon in the northeastern US states: you can drive across most of them in a day if you're lucky about traffic. Rhode Island and Maine, for example, are almost microscopic compared to the Western states. It seems to me that the original European colonies that later became states and provinces tended to be geographically contained because there *weren't* railroads or highways available. The waterways were the major trade routes for a long time.
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Note: if you're a textbook mustachian (saving 60% of your income), this would imply having 5X your expenses saved by age 35...probably means you have about another 7 years of working still ahead of you.
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Agreed, tedious statement
Guys Guys Guys! It was a joke, it didn't break the internet. I just read about it all the time on yahoo.com and thought I would continue it in joking manor!!!
Joking Manor? Do you mean a funhouse?
I fail to see what the issue is . . . I save double my salary every four years.
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The Canadian Maritime provinces are quite small because the political boundaries were drawn up before major travel infrastructure was really a "thing". I see a similar phenomenon in the northeastern US states: you can drive across most of them in a day if you're lucky about traffic. Rhode Island and Maine, for example, are almost microscopic compared to the Western states.
Did you mean Massachusetts and Rhode Island? Maine is 350 miles top to bottom.... that's comparable to Colorado or Wyoming.
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The Canadian Maritime provinces are quite small because the political boundaries were drawn up before major travel infrastructure was really a "thing". I see a similar phenomenon in the northeastern US states: you can drive across most of them in a day if you're lucky about traffic. Rhode Island and Maine, for example, are almost microscopic compared to the Western states.
Did you mean Massachusetts and Rhode Island? Maine is 350 miles top to bottom.... that's comparable to Colorado or Wyoming.
Top to bottom is Maine's longest dimension, though. It's sort of diamond shaped, and the northwestern portion is sparsely inhabited so most of the infrastructure's farther south. So, maybe not microscopic but there's a concentration of population not often seen in a state that's been settled that long.
Agreed re: Massachusetts. Delaware and Connecticut are likewise miniscule.
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I think something that muddies the waters on the topic of saving with a lower income is approaching it with an ER mindset. I don't think there's much of an argument to be made that being able to retire significantly early requires varying amounts of privilege.
It seems to me that many who will not be able to retire early use that as an excuse to not save at all. Saving 10% of a 30k income is obviously not going to let you retire in your 30's or even 40's. But by the time normal retirement age comes around those savings would be significant. It's a longer game (and likely a more frustrating one knowing some people accomplish the same thing much more quickly), but isn't saving for the future better than not saving at all?
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I think something that muddies the waters on the topic of saving with a lower income is approaching it with an ER mindset. I don't think there's much of an argument to be made that being able to retire significantly early requires varying amounts of privilege.
It seems to me that many who will not be able to retire early use that as an excuse to not save at all. Saving 10% of a 30k income is obviously not going to let you retire in your 30's or even 40's. But by the time normal retirement age comes around those savings would be significant. It's a longer game (and likely a more frustrating one knowing some people accomplish the same thing much more quickly), but isn't saving for the future better than not saving at all?
The problem is when you save for the future, but then your mother needs money to avoid being homeless. You didn't get to have fun with your money nor do you get a future with it. Much better to have some fun and hope someone else steps up for mom.
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I think something that muddies the waters on the topic of saving with a lower income is approaching it with an ER mindset. I don't think there's much of an argument to be made that being able to retire significantly early requires varying amounts of privilege.
It seems to me that many who will not be able to retire early use that as an excuse to not save at all. Saving 10% of a 30k income is obviously not going to let you retire in your 30's or even 40's. But by the time normal retirement age comes around those savings would be significant. It's a longer game (and likely a more frustrating one knowing some people accomplish the same thing much more quickly), but isn't saving for the future better than not saving at all?
The problem is when you save for the future, but then your mother needs money to avoid being homeless. You didn't get to have fun with your money nor do you get a future with it. Much better to have some fun and hope someone else steps up for mom.
Good point. Family stability is a whole other area of privilege that I would imagine comes with higher incomes.
I currently have a peer at work who comes from a very hectic family life. He's working hard and making a more stable life for himself, but there's always somebody who needs money or favors because they burned bridges with everyone else. He's having to learn he can't be everybody's safety net, at painful as it may be. Since knowing him I've really had my eyes opened to how privileged my own family life was/is.
Never thought of applying that privilege to a situation such as my earlier example. Definitely a complicating factor.
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I think something that muddies the waters on the topic of saving with a lower income is approaching it with an ER mindset. I don't think there's much of an argument to be made that being able to retire significantly early requires varying amounts of privilege.
It seems to me that many who will not be able to retire early use that as an excuse to not save at all. Saving 10% of a 30k income is obviously not going to let you retire in your 30's or even 40's. But by the time normal retirement age comes around those savings would be significant. It's a longer game (and likely a more frustrating one knowing some people accomplish the same thing much more quickly), but isn't saving for the future better than not saving at all?
The problem is when you save for the future, but then your mother needs money to avoid being homeless. You didn't get to have fun with your money nor do you get a future with it. Much better to have some fun and hope someone else steps up for mom.
Good point. Family stability is a whole other area of privilege that I would imagine comes with higher incomes.
I currently have a peer at work who comes from a very hectic family life. He's working hard and making a more stable life for himself, but there's always somebody who needs money or favors because they burned bridges with everyone else. He's having to learn he can't be everybody's safety net, at painful as it may be. Since knowing him I've really had my eyes opened to how privileged my own family life was/is.
Never thought of applying that privilege to a situation such as my earlier example. Definitely a complicating factor.
Privilege is a surprisingly weird and complicated thing. There are about a dozen different ways of looking at it on this message board alone.
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Well I'm 34 in September and my wife and I seem to be doing OK even with a two year old daughter. The only inheritance /gift we had was approx. £20,000 from my wife's grandfather back in 2011 which did help us buy our first home.
(https://image.ibb.co/fX26pd/Screen_Shot_2018_06_16_at_07_35_09.png)
I already see it in my workplace with millennials who are slightly younger than me. Many of them do not prioritise a well paid career and want do do other things with life. That's fine but they often can't have it all unfortunately and they need to recognise the financial cost. In the UK we have record unemployment so there are plenty of stepping stones to well paid careers.
Then again I think my temperament is more like a Gen X so maybe I just don't "get it".
Aside from our joint expenses (bills/groceries/family trips out) I spend no more than £150 per month on personal items. To be honest I just can't think of stuff I want to buy. For example I don't buy designer clothes, I buy well made classic items including John Lewis own label often in the sale.
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33 Here (wife is 34) and our current net worth is a bit more than 1x my annual income. Actual retirement savings specifically are about 0.75x of my income. We have five kids with number six on the way and my wife stays at home to take care of the kids and homeschool them. We knew very early on that we would always be behind our dual-income peers since we planned to homeschool and have a large family. Certainly won't be hitting 2x my salary in retirement savings, or even net worth by 35 but I also don't expect to have to work until I'm in my late 60s. I should have a modest military pension starting at 60 and possibly another small one from my current federal job, assuming I work here a few years longer. Definitely plan to be able to retire by the time I'm 60, hopefully a but sooner.
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I realize the conversation in this thread has drifted from this a bit, but I read a lot of comments saying that people would "support some kind of social safety net that provides a floor for the poorest Americans".
We already have this. The US spends a significant portion of our GDP on social safety nets. Also, when you include Social Security, Medicare, Medicaid, SNAP, welfare, disability, unemployment, etc., the United States has the second lowest Gini coefficient among all developed nations, behind only France.
Steven Pinker wrote a great chapter in "Enlightenment Now" about how the "problem" of income inequality in the US is mostly a red herring. In general, inequality in income is not a significant factor in human unhappiness (inasmuch as people are unaffected by "relative deprivation" i.e. feeling unhappy only because the Jones' next door make more than they do). What is a legitimate problem, and what many people refer to as "inequality", is unfairness. I think there is a feeling that the US economy is "unfair", but that is different from "unequal". Furthermore it is not difficult to find countries that are very unequal but also very happy (Singapore, Hong Kong) or that are equal but unhappy (former Soviet Union countries).
Also, if a certain slice of the US population earned 10% of all income in 1980 and still earns 10% of all income today would earn significantly more in absolute income due to overall GDP per capita growth in the US over and above inflation. But people see that the relative amount has stayed the same and think that someone is earning the exact same amount of money (the "lump fallacy" (https://en.wikipedia.org/wiki/Lump_of_labour_fallacy)).
Millennials (of which I am one) have a strong sense of justice so they feel like they are "sticking up" for the poor by reacting angrily to articles like this one. So their moral outrage is born from good intentions. But I think that righteous outrage too often turns into blaming the world for their own problems. No doubt there are people who have been made the "losers" of our economy, but I would be willing to bet that the vast majority of those Twitter warriors are not one of them. I agree with what another poster said, that too few people of my generation are willing to say "What is in my circle of influence (https://www.mrmoneymustache.com/2013/10/07/how-big-is-your-circle-of-control/)? What can I do right now to affect my life?" More people ought to read "The 7 Habits of Highly Effective People".
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Saving twice my salary at age 35 - that was easy b/c my income was terribly low b/c I was fresh out of the military and attending college.
DW and I got a late start but we're doing fine now. Won't retire in our 40s but should retire around age 60.
What we have is financial security and freedom from typical life challenges like an inability to repair the car or pay for some school fee for our kids, etc. Sending junior to State U - especially if they attend locally - will be easy and out of pocket rather than via loans. Junior won't have deluxe experience with new(ish) car and luxury apartment but that won't hurt junior.
We used all the typical MMM strategies discussed frequently here.
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We already have this. The US spends a significant portion of our GDP on social safety nets. Also, when you include Social Security, Medicare, Medicaid, SNAP, welfare, disability, unemployment, etc., the United States has the second lowest Gini coefficient among all developed nations, behind only France.
I'd like to see a source on this Gini coefficient.
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We already have this. The US spends a significant portion of our GDP on social safety nets. Also, when you include Social Security, Medicare, Medicaid, SNAP, welfare, disability, unemployment, etc., the United States has the second lowest Gini coefficient among all developed nations, behind only France.
I'd like to see a source on this Gini coefficient.
I read that in the aforementioned Pinker book, which I just returned to the library two days ago, so I unfortunately can't look up the reference he used. This link (http://www.pewresearch.org/fact-tank/2013/12/19/global-inequality-how-the-u-s-compares/) says differently, so I'm not sure what source Pinker used.
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I'm not going to hold myself up as a paragon of saving, especially around these parts, but we managed to do this despite not finishing school until 27, not receiving any windfalls, not making much more than the median HHI of the area before 35, and starting with a decent chunk of student debt from the wife (NW was about 3x HHI at 35). DW's cumulative net income didn't exceed her student debt until she was 34, and my salary didn't exceed my inflation-adjusted starting salary until I was 34 as well due to the great recession. Neither of us have been laid off, so we do have that going for us.
I've definitely heard enough millenials express the general attitude of "woe is me, things are so much harder now, look at house prices and pensions and stagnant wages and college debt and wah wah wah, so why even really try? I want my travel, nice car, restaurants, and latte and those are small change compared to things like a house or retirement, which I'll never have." This attitude has been expressed even by co-workers, whom I know are making six figures +/-.
Sure, it's a metric that you can't measure everyone by. However, most people with a college degree and an actual career should be able to manage it.
Agreed on the multiple of salary as a metric being pretty flawed anyhow (I'm looking at you, Millionaire Next Door) - our HHI has increased substantially over the last four years. Nevertheless, while not really increasing spending, our "Whatever Accumulator of Wealth" metric hasn't been increasing much despite our savings rate going up and up. I suppose that now I'm expecting both of our salary increases to be leveling off, we'll be doing better (?).
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We already have this. The US spends a significant portion of our GDP on social safety nets. Also, when you include Social Security, Medicare, Medicaid, SNAP, welfare, disability, unemployment, etc., the United States has the second lowest Gini coefficient among all developed nations, behind only France.
I'd like to see a source on this Gini coefficient.
I read that in the aforementioned Pinker book, which I just returned to the library two days ago, so I unfortunately can't look up the reference he used. This link (http://www.pewresearch.org/fact-tank/2013/12/19/global-inequality-how-the-u-s-compares/) says differently, so I'm not sure what source Pinker used.
I wonder if it only adjusted the US Gini based on government programs, but not other countries?
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When I turned 35 two years ago I had somewhere between 3.5 to 4 times my salary saved.
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Not having access to the Pinker text, I did a quick web search for his GINI calculation, and I found this review (which I have not yet read): http://www.mdpi.com/2076-0760/6/4/147/pdf (http://www.mdpi.com/2076-0760/6/4/147/pdf)
I'll try to post again here when I feel I understand this enough to make an intelligent report. It's possible we've strayed from the topic far enough that a new topic post is needed.
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concerning GINI coefficient. I remember this article about it from 2013. Which has the interesting point that you have to be careful about talking about the household ratio or the individual ratio. The family ratio has been getting worse (more unequal) since the 70's while the individual ratio has been stead since the 60's. I believe it was economist professor Mark Perry from the University of Michigan Flint, who concluded that this was because of self selection in marriage trends. College educated people tend to marry other college educated people, and two-earner households tend to out earn single income households. Since at one point prior to the 70s is was rare to see two high-income earners in one household that advent of that has lead to a natural change in the coeddicient
https://politicalcalculations.blogspot.com/2013/12/the-major-trends-in-us-income.html#.W0OAQtVKgdU
Back to the original topic. I've found it challenging to save twice my income because even though i save a ton, my income keeps going up to fast to keep my ratio high....
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I'm really glad you raised the issue of marriage (ten years ago I wrote a dissertation chapter on this): indeed assortative marriage has increased income inequality.
Of course, I can say that I want to live in a more equal society, but when my daughter brings home a hoodlum and tells me she wants to yoke her college-educated life to his un-worthy butt, of course I'll suddenly become fine with a higher GINI coefficient :-)
I don't know exactly how old you are, but one of the most thrilling things about the decade of the 20's is how quickly income increases. Here at MMM, people tend to focus on expenses--rather than income--as the most important denominator in these ratios, and this income increase shouldn't matter as much when judged thusly.