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Gen Z wants to retire early. They're off to a good start

businessinsider.com

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Re: Gen Z wants to retire early. They're off to a good start

#31

Post by randomdata »

JohnPrine wrote: post #25
randomdata wrote: post #20

Earlier quoted context omitted.

Yes, that's right. Assuming a typical lifespan, they will have 20 years left in ~40 years. Assuming a 2% inflation rate, $3 million in 40 years is equivalent to ~$600,000 today. A 60 year old holding $600,000 today does not seem like that high of a bar.

He means the article is saying they will need $3 million in today's dollars to retire

The needs of retirement should scale with inflation, so that means you also need $3 million today (in today's dollars) – which is rather high. $600,000 is not too far off what is the minimum recommended amount of saving to retire for 20 years on today, so it seems they simply adjusted that figure for inflation and then forgot that the income used to build up those savings also goes up with inflation.

Re: Gen Z wants to retire early. They're off to a good start

#32

Post by randomdata »

coldtea wrote: post #30
randomdata wrote: post #5

> Given that financial advisors say that Gen Z will need roughly $3 million for a 20-year retirement — a high bar even for smart money managers If we assume a 2% inflation rate going forward, that's only ~$600,000 in today's dollars. Seems like a relatively low bar, no?

That's not how it works. They'll need the equivalent of today's $3 million in inflation-adjusted dollars for the time they retire. What you're saying amounts to a Zimbabwean being able to retire with his lunch money AFTER the country got 1000x inflation and everybody had trillions in their pockets just to get some food for the day - based on the purchasing power of that amount before the inflation.

That would imply you also need $3 million today. Retirement will be more expensive then, but scaled in line with inflation.

Re: Gen Z wants to retire early. They're off to a good start

#33

Post by randomdata »

antisthenes wrote: post #26
randomdata wrote: post #20

Earlier quoted context omitted.

Yes, that's right. Assuming a typical lifespan, they will have 20 years left in ~40 years. Assuming a 2% inflation rate, $3 million in 40 years is equivalent to ~$600,000 today. A 60 year old holding $600,000 today does not seem like that high of a bar.

> A 60 year old holding $600,000 today does not seem like that high of a bar. Gen Z isn't 60 years old today. They don't have 600k, and for them, it is a high bar.

That's right. They have ~40 years left to acquire $3 million before they have 20 years left, assuming the typical human lifespan. Which, adjusted for inflation, is the same as someone who saved $600,000 over the past 40 years.

Re: Gen Z wants to retire early. They're off to a good start

#34

Post by Izkata »

woodruffw wrote: post #21
anovikov wrote: post #15

Earlier quoted context omitted.

Well, there haven't been real big, bad crashes in the living memory. And anyway, this isn't what investors are worried about - they are worried about protracted bear markets.

Other than 2008, you mean?

Counter to the other comment, I was in the middle of college and somehow didn't know about that until years later. After I started working in 2011 at least.

Re: Gen Z wants to retire early. They're off to a good start

#36

Post by AmVess »

randomdata wrote: post #5

> Given that financial advisors say that Gen Z will need roughly $3 million for a 20-year retirement — a high bar even for smart money managers If we assume a 2% inflation rate going forward, that's only ~$600,000 in today's dollars. Seems like a relatively low bar, no?

People shouldn't pay any attention to these articles.

I retired early years ago. It isn't the annual budget that one has to plan for, but the unforeseen expenses. I took care of my mom and dad for a while. He had top notch medical insurance, but no one covers mental health problems. The total for 4 years of that was just into 7 figures.

Also how about that medical insurance for yourself and your family? Unless people plan on dying young, medical insurance is a huge expense. And that's just insurance, which doesn't cover all eventualities. Ambulance ride? Not covered. A quick whistle to the ER can leave you $50k lighter without trying hard. And then there's the piles of medications, many of which aren't covered.

My friend's grandmother got upper and lower dentures. $40k. Dentures, mind you, not implants.

Also, there's the every increasing cost of everything. Houses, cars, food, all types of insurance are seeing vast annual increases.

$3 million total for a retirement is a bit of a laugh, unless that person plans on keeling over at 65.

Re: Gen Z wants to retire early. They're off to a good start

#37

Post by coldtea »

randomdata wrote: post #31
JohnPrine wrote: post #25

Earlier quoted context omitted.

He means the article is saying they will need $3 million in today's dollars to retire

The needs of retirement should scale with inflation, so that means you also need $3 million today (in today's dollars) – which is rather high. $600,000 is not too far off what is the minimum recommended amount of saving to retire for 20 years on today, so it seems they simply adjusted that figure for inflation and then forgot that the income used to build up those savings also goes up with inflation.

$600,000 for 20 years is 30K per year. They'd get by on those for the next 20 years if they were to retire today?

Re: Gen Z wants to retire early. They're off to a good start

#38

Post by garethsprice »

gedy wrote: post #3

> Gen Z started saving for retirement at the median age of 19, earlier than any other generation ? Median? These numbers seem unrealistic for anyone I know who went to college, and those who didn't are in low pay jobs with no retirement plan

"Gen Z... in the survey pool". It's a good study, and used solid methodology for finding participants (Harris poll). But the pool of people who will self-select to do a 30+ minute personal finance survey in exchange for points that can be exchanged for gift cards is inherently going to skew towards the kind of people with the aptitude (and, for the young, parental influence) to start saving early.

Still a useful stat in the relative sense to compare inter-generationally, or to previous surveys.

Re: Gen Z wants to retire early. They're off to a good start

#39

Post by coldtea »

randomdata wrote: post #33
antisthenes wrote: post #26

Earlier quoted context omitted.

> A 60 year old holding $600,000 today does not seem like that high of a bar. Gen Z isn't 60 years old today. They don't have 600k, and for them, it is a high bar.

That's right. They have ~40 years left to acquire $3 million before they have 20 years left, assuming the typical human lifespan. Which, adjusted for inflation, is the same as someone who saved $600,000 over the past 40 years.

So, like, not so many people, and even less going forward?

https://fortune.com/recommends/banking/57-percent-of-america...

Re: Gen Z wants to retire early. They're off to a good start

#40

Post by ch4s3 »

Izkata wrote: post #34
woodruffw wrote: post #21

Earlier quoted context omitted.

Other than 2008, you mean?

Counter to the other comment, I was in the middle of college and somehow didn't know about that until years later. After I started working in 2011 at least.

How did you miss it? I graduated in 2009 and it was the only thing people were really talking about after the 08 election wrapped up. It took a lot of people I knew over a year to find work.
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