<p>They probably bought more house than they should, they take nice vacations, perhaps buy too many clothes or other toys, etc. They may have lots of student loans and they may have lots of credit card debt that they can’t get out from under. Yes, they SHOULD have saved more and spent less. They are not alone. You obviously don’t want to follow their example, so you probably won’t find yourself in their predicament.</p>
<p>Hopefully they (and you) don’t have any medical disasters, because even with health insurance and a nice savings cushion, that can deplete the whole nest egg.</p>
<p>In our 30s with a brand new baby every penny we had saved plus a gift from our parents went into the down payment of a small starter house. Happily we’ve saved some since then. We did advise our oldest son when he was making a lot more money than he needed at a summer internship (yay computer science!) that he might want to start an IRA which he did.</p>
<p>Here’s a thought- maybe they wanted to enjoy life before having a child? That could mean expensive vacations and whatnot rather than saving, but that’s their choice. Maybe now that they’ve had a child, they’ll be saving much more.</p>
<p>I know plenty of young couples who wanted to enjoy life while they were young. For example, I have a cousin who is in his early 30s and just married his long-time girlfriend. They are working on their first child and have just begun to settle down (bought a house, saving, etc). However, my cousin is a stuntman/actor and she is also an adventure seeker. Instead of saving a good amount of their money, they decide to spend their very decent income on traveling to India, Africa, doing safaris, skydiving, etc because they don’t want to do those things when they’re older and/or have young children (given the risky nature of some of those). This isn’t to say that “older” people can’t do these things, but they wanted to do it while they were sure they could. Especially given the very risky nature of my cousin’s occupation. </p>
<p>Both of my parents were flat broke in their late 20s/early 30s when they married and had me. They had both gotten out of nasty divorces that wiped everything out. Despite making a modest income, followed by poverty-level, and now back to modest income they have managed to accumulate a nice amount in savings and assets due to smart financial decisions. </p>
<p>Meh. Different decisions for different people. I just don’t think that what you’ve done in your 20s and before you’ve had a child is necessarily an indicator of how you’ll proceed in life.</p>
<p>Well it’s hard to say what you “can handle” or not. I graduated college with over $50k in student loans and at the rate I’m paying it’ll take me close to 7 years to pay that off. I would really struggle if I wasn’t currently living at home, but I could make those payments over 10 years instead of 7 and it would be easier…</p>
<p>I also save between $300-500 each month depending on other expenses that come up. </p>
<p>There are some things that you just cannot pay cash for and going into some amount of debt is just going to happen…</p>
<p>People have different priorities. I am in my mid-20’s. While making sure to pay off a good chunk of my debt every month and putting away retirement money (although not the full $5000 a year at this point) and having a small emergency fund, my first priority is not saving. I love to travel and want to do more of it, and a good chunk goes to that.</p>
<p>I also have pets, and believe me when I tell you, that’s a huge expense in itself. I wouldn’t trade them for the world. They are family.</p>
<p>My point is, people have different priorities. As long as all my obligations are taken care of, I want to use my money to enjoy it, not to put evey penny in savings. And why shouldn’t I? It may not be what YOU want to do, but not eveyone wants the same kind of life.</p>
<p>The OP’s assertion is correct - if the couple is an “accumulator of wealth”. Accumulators “live below their means” and “save for a rainy day” rather than take numerous exotic trips, buying BMW’s and eating at expensive restaurants. </p>
<p>Expensive cars and vacations are easy enough to avoid, if you want to; however, excessive amounts of student loans can destroy the ability of young adults to accumulate wealth for the first 10 years or more of their earning years. Also, a little self-restraint on the spending early on in life can pay big dividends in the future. Habits of thrift are developed and savings compound and grow. This gives you the option to spend more and enjoy your wealth later.</p>
<p>There are numeous books on the topic such as Rich Dad Poor Dad, The Millionaire Next Door and Secrets of the Millionaire Mind.</p>
<p>There is such a difference in certain parts of the country. I don’t see how any young person (“young” is 35 or less) who lives in Manhattan can save much. </p>
<p>We moved from Texas to Greenwich, CT at the age of 31. DH took a job in the city and believe me it was a wake up call. Our infant son slept in the dining room because we couldn’t afford a large enough house. While our decision to move there ultimately helped his career, we were barely scraping by with NO money going into retirement for about 3 years. Once we moved back to Texas 3 years later we were able to get back on track.</p>
<p>“Get busy living, or get busy dying” …Plowing all your money into savings and not enjoying life while you can is a huge mistake…I am not saying NOT to save, but you can accumlate money and have it wiped out in another stock market decline or lose your health…The Millionaire Next Door is a nice story, but in reality,and this has been written about,that their children attend top,pricey schools, and move out of the simple life ,into the luxury type life that money enables</p>
<p>Do you enjoy life by making big ticket purchases or by more moderate purchases and the knowledge that you have some downside protection? Do you have to visit the Himalayas, or will the Alps suffice, or better yet the Rockies? </p>
<p>I work in Wealth Management and have seen people who had multi-million dollar salaries declare bankruptcy within a few years and middle manager couples who never had excessive salaries ushered into the private banking chambers because they had accumulated several million in assets. I truely believe it is how your brain is wired. You either need/crave instant gratification or you see the benefit of delayed gratification. </p>
<p>I mentioned the books because they stress the need to accumulate wealth by moderating your spending. However, once you have accumulated some wealth some it should be enjoyed. Yes, you could die tomorrow. However, life insurance company actuarial assumptions now plan for whole life policies out to 121 years. As a saver, I don’t want all the spenders ignoring the realities of life and winding up on the dole and driving up my taxes.</p>
<p>Maybe I’m just entering into crotchedy old age - but who are you (we) to judge, anyway? They didn’t ask you for a loan, and they don’t want to move in with you and sleep on your couch. It’s their money, their life, their priorities.</p>
<p>How much should “we” have? By “we” I mean those of us in the 50+ range? I have a hard time believing all the retirement calculators. I’m planning about $27,000/year pension and maybe $12,000/year SS. House will be paid for and no other debt. Husband will have SS but no pension. How much should we have in addition?</p>
<p>insomniatic - I think this topic is interesting and relevant for the parent cafe. It is hard to raise a discussion without some criticism flying around; FWIW, I think you sounded more surprised than judgemental. </p>
<p>I think our culture promotes less saving and more immediate satisfaction mindsets. Certainly, this couple could be paying off student debt or has been hurt by the housing slump. I agree with you, however, that given the info we know, they are undersaving. </p>
<p>I plan to advise my adult kids to get saving young, and to take advantage of employee matching and tax advantaged savings as soon as they can. My H and I have always lived below our means so we could pay off debt and save (both liquid and less liquid assets) and we are very happy we did. I am all for enjoying life - esp. pre baby - but doing so in a way that does not create a tenuous situation down the road. Your cousin admitted to being concerned. Perhaps a well intentioned and kindly worded suggestion to visit a reputable financial planner would be a good idea.</p>
<p>bluejay,
I would love to know the answer to your question. Its one my Dh and I dance around often. </p>
<p>I honestly don’t know how much my s’s have. I have a pretty good idea of what younger s has, as he has only recently moved his accounts to where I can no longer see them He has saved some money, but most of what he has is money left from gifts and leftover from the college fund. </p>
<p>Older son has been saving much more money, but had no $$ left from the college fund. That said, he did a great job of saving thoughout college and has a nice netegg, I believe. HE started talking a little bit about considering buying a house, but its pretty expensive where he lives and I am not usre he wants the responsibilities of home ownership just yet. That said, he probably has enough saved for a decent down payment.</p>
<p>bluejay, I was having coffee with a friend last week who had just come from a meeting with her financial planner. The figure she threw out was $3 million. Assuming you live 30 years after retirement, that gives you about $100K per year.</p>
<p>It is an oversimplified and rough estimate, but that figure might be a starting point.</p>
<p>We’ve made a point of emphasizing retirement savings while young to our D (because once we figured out what we SHOULD have done, it was too late, LOL)…contribute to your 401K and don’t cash it out, we’ve told her…and you’ll thank yourself when you are 60 years old…</p>
I’ve heard we’ll need 70% - 80% of current annual income as a rough rule of thumb. But, I think that’s for people who want be active and splurge a little in retirement. I bet most of us could probably have a nice, hometown, quiet life retirment on less. </p>
<p>Older son will probably have saved 20K by the end of the summer, and I suspect he’ll reach your 200K number in his mid twenties. But this is someone in a highly paid profession, who has no interest in spending money. I’d think that most people in their mid thirties, if they have the 25K your cousin has saved, with little debt, they’re probably doing better than most.</p>
<p>Life has a way of sneaking up on you. I’d bet that if you add up all their expenses (cars, gas, all the different types of insurance, union dues for the teacher, the massive amount of expense that goes with owning a house, etc,etc), they would have very little left. Unless you are making saving money your top priority, and live the lifestyle required to do so, you’re not going to save 20K on a salary like that. Most people don’t think that far ahead, get used to the comforts in life (iphone, eating out, vacations, Starbucks, nice furnishings and electronics for their house–that they bought too much of), and before you know it, there’s nothing left. I wish I would have listened to Dave Ramsey when I was young, he would not approve of my lifestyle now, and it’s too late!</p>
<p>Unlike our parents’ generation, many of us will have housing costs in retirement thanks to more moving around during careers, refinancing, and the housing market. I know very few of my peers that will live mortgage free any time soon. Something to consider when figuring out percentage of current income calculations. Our guy says 80% of current income. Scary, esp. when considering SS will likely be means tested.</p>
He has saved some money, but most of what he has is money left from gifts and leftover from the college fund. </p>