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Do you save?

Discussion in 'Anything goes' started by Dick Whitman, Sep 25, 2012.

  1. Dick Whitman

    Dick Whitman Well-Known Member

    Unfortunately it's behind a paywall, but interesting story in the WSJ's A1 today about the savings habits of young Americans.

    http://online.wSportsJournalists.com/article/SB10000872396390443545504577567372199701282.html?mod=WSJ_hppMIDDLENexttoWhatsNewsSecond

    The money facts:

    * In 2003, only 27 percent of employees under 25 participated in 401(k) retirement plans. Today, 44 percent of them do.

    * Among those ages 25 to 34, 63 percent now participate, up from 58 percent in 2003.

    * The number of people with credit card debt ages 25 to 34 dropped from 63 percent in 2002 to 45 percent in 2010.

    The rest of the piece is interesting, too, but these are staggering changes in a short amount of time.

    The story doesn't really address it, but is it possible that younger people are just not as materialistic as those that came before us? We've read stories - like last month's in The Atlantic - about how young people no longer pursue cars as status symbols. There's a few thousand a year in savings. They don't spend as much on music or home movie collections, I presume. Stores like Target, in particular, make it possible to look stylish on a budget.

    In short, I wonder if these statistics are a perfect storm of all the things the story mentions, like the financial crisis in 2008 alerting people about the importance of saving for a rainy day, along with some lifestyle changes that truly do make this generation a little different than those before. In a good way.

    Oh, and to answer the question, the reason the story grabbed my attention is that I just, a few days ago, socked $100 away in a savings account. First time in a long time. It's just a start, but it's a start. (For the record, my wife has been contributing to her work's retirement plan for many years.)
     
  2. dooley_womack1

    dooley_womack1 Well-Known Member

    I save, but Esposito scores on the rebound.

    Anyhoo, I think 401(k) use is on the rise in part because pensions are becoming increasingly quaint
     
  3. SixToe

    SixToe Active Member

    Ms. SixToe and I have saved the maximum amount allowed in 401(k) plans for more than 20 years, along with putting aside other money in long-term retirement savings plans or accounts. I'd say we have a nest more than a nest egg.

    I do not count on any government Social Security in my future. If it's there, bonus for us. I don't expect my newspaper to maintain the pension plan at its current level, because they are slashing in other areas and likely will target that one day. If not and it remains as is, bonus for us. When our parents die, if they leave us anything then that's extra. I don't count on any of those things as definite. Our savings plans have taken hits in the last 5-8 years but my financial manager is a smart guy and keeps our money in pretty good shape.

    When we retire, if we live as frugally as we plan then we shouldn't have any issues. Even if we get a little wild with our hoped-for travel or something else, we still will be OK. Should medical problems befall us then we should be OK, too.
     
  4. cranberry

    cranberry Well-Known Member

    My view has been that a lot of people's economic habits are changing for the better, in great part as a result of the crash.

    If I were young, I know I'd be even more cynical about the crash than I am already. Less materialism, I think, is just one result. Why join the rat race if everything can be taken away so quickly? Is the pursuit of money where I want to invest my time and energy? Why be saddled with a big mortgage payment, car payment, etc.? Why not take a "less is more" approach by leading a simpler life?

    It becomes especially easy to adopt that type of outlook when there aren't as many good jobs available. I suppose in time, enough people will take entrepreneurship lessons from YankeeFan and adapt to the "you're on your own" economy of the future.

    Meantime, absent the hyper-growth economy, I think we'll see more people take a RickStain-like approach. Seems like we're just beginning what may be a long period of slow growth, which isn't necessarily a bad thing if it allows or encourages people to focus on other aspects of their lives. Maybe a lot of folks become a little more civil and thoughtful?

    FYI, I'm 54 now and I've saved in retirement accounts since my mid-20s. By doing so I've put myself into position, barring catastrophe, to pay off my house and my daughter's full tuition through grad school, and to have a more than comfortable retirement.
     
  5. LongTimeListener

    LongTimeListener Well-Known Member

    Save like a mofo. Drive a '98 Toyota and will do so for at least another four years until my son is 16. Been putting money in a 401k since I was 22. House should be paid off by the time I'm 50. I have very little concern about being able to retire and afford the lifestyle I'm living now. Saving early is key, for all you kids out there watching.

    Anyone ever seen the movie I.O.U.S.A.? Great, great educational experience. In the USA we suggest that people save 6 percent, which most people find unattainable. In China, the average household savings rate is 35 percent.
     
  6. Mizzougrad96

    Mizzougrad96 Active Member

    We're pretty good about saving money. We've been putting money away for college for both kids since they were born. When my car broke down after over a decade, I bought a used car for half the price of a new one. We make enough (combined) to live pretty well and we have a great house, but we're really cheap about a lot of things so we can afford to take one really nice vacation a year (usually Disney) and still be able to put away a lot for college and save a lot as well.
     
  7. Brian

    Brian Well-Known Member

    I'm 28 and the recession changed the way I've planned for the long term. Once I paid my modest college loan of $13,000 off after about two years out, I decided to never owe another a dollar in my life. No car loans, no mortgage, no credit card bill I can't pay off instantly. No long term contracts to things like cell phone providers and satellite dish companies. I plan on paying as I go. It's the only way I feel secure in a harsh global economy. I make peanuts, but I try to save 35 percent of my income each year and get $2,000 a year into an IRA.
     
  8. LongTimeListener

    LongTimeListener Well-Known Member

    One piece of advice I read many years ago that resonates: Don't shortchange yourself to save for your kids. You can borrow college money, it's an investment. Nobody is going to "invest" in your retirement.

    Also, most retirement accounts allow withdrawals for qualified college expenses -- which is just about everything -- if you're 45. The only difference between that and a college savings account is that it will be taxed at your rate instead of your kids'. But for the flexibility, saving it under your own name is the way to go.
     
  9. I'm trying to get that way.

    When I saw my bank account was complete and utter shit, I took a budget. Right now, because I wasn't looking as hard as I was before, I just have a sketchy budget in mind, but that should become clearer in the next month or two.

    I'm losing weight, so all of my clothing purchases are coming via second-hand stores until I hit my goal weight, and even then I may only advance to the higher-level second-hand places such as Plato's Closet.

    With food, I'm trying to move into as many generic brands as I can and looking at which places have the lowest prices on brands that I can't get generic. An extra 15 cents may not seem like much, but added up for every purchase it gets there.

    When I'm eligible to move into a 401(k), I plan on jumping in - I won't take that many risks, mostly because I learned from a few people. My grandfather dropped some major retirement money into Enron, while my mom put her 401(k) money into annuities and the like. My mantra is if I put a penny in, I want my penny and inflation - or as close to it as I can - back.

    I do still make the foolish 23 year old purchases - I occasionally buy video games because I just got a PS3 through a friend, but those are/will be few and far between.
     
  10. Mizzougrad96

    Mizzougrad96 Active Member

    I'm pretty sensitive about making sure my kids won't have to pay for college. My parents had more than enough money to pay for my sister and I to go to college, but it became a colossal pissing match between divorced people who hate each other and we had to pay the price. My sister went to a pretty expensive school and took out the loans and later shamed my parents into paying the bulk of it off. I couldn't qualify for financial aid, but I had a nice mix of scholarships, work-study and other jobs and I graduated owing very little and paid it off in a couple years.
     
  11. Buck

    Buck Well-Known Member

    Also, Waffler, your risk level should be influenced by your age.
    As a young investor you can abide more risk. As you get older, you have to adjust and decrease investment risk.
     
  12. Mizzougrad96

    Mizzougrad96 Active Member

    Investing these days is so much riskier than it was in the late 1990s. I was really lucky that I cashed in my investments when I switched jobs in 1999 and was too lazy to reinvest. Not that I had a ton, but when people were seeing their investments drop after 9/11, my money was in the bank.
     
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