Millennials and Retirement – Passive Crypto
We’ve all been told that we need to start saving for retirement early, but never told how we should do it. If we do what our parents and grandparents did, we might be ready to retire by 65, but there’s no guarantee. Baby Boomers were able to save their money and invest a little in order to be ready for retirement. Gen X had to invest their money to retire when they want to. Millennials don’t necessarily have that luxury. We’re going to see why that is by comparing college costs and retirement strategies for three generations: baby boomers, Gen X, and millennials.
The National Center for Education Statistics reported a public 4-year university cost around $427 per year in 1970, around the time when baby boomers were in college. Minimum wage at that time was $1.60 per hour. In order to afford a year’s tuition, a student would have needed to work 7 weeks at a full-time job. If you add the remaining costs of school, most students would be able to afford an entire year’s worth of college on just a summer job.
In 1990, around the time Gen X went to college, a full year’s tuition was just over $2,000. Minimum wage was $3.80 at that time, so students would need to work full-time for about 3 months in order to afford tuition for a full year. These students might have needed a part-time job during each semester to pay for their additional costs.
In 2010, when millennials were in college, the average tuition was over $17,000 per year. In order for a student to pay for an entire year’s tuition, they would need to work full-time for around 15 months. Most of these students took out loans in order to pay for school, sending them into years of repaying loans.
Over the course of 40 years, tuition increased by around 4,000%, with around 90% of that coming in the last 20 years. This happened partly because the government got involved in colleges and banks by offering subsidized loans that would be paid by the government if the student defaulted. Once schools realized they could get more money from students paying with loans, tuition rates increased.
Before we get into how each generation planned for retirement, we need to understand how tuition rates can affect retirement planning. When saving or investing for retirement, you need to have money to save. If your tuition is affordable, like $427 per year, then you probably don’t have any student loans taking your money. If your tuition isn’t affordable, like $17,000 per year, then you probably have student loans taking your money. Without a loan, you have a little extra money to put away every month, allowing you to invest for retirement. The price of tuition severely impacts how much money people have to put towards their retirement.
Now we’re going to look at how each generation plans on retiring. The Insured Retirement Institute performed a study on baby boomers and found that around 45% of baby boomers have no retirement savings and just under 40% have more than $100,000 saved. This means most baby boomers are living off of social security. There wasn’t much planning for retirement among baby boomers because they had the assurance they’d receive social security payouts.
On the other hand, Gen X did some serious retirement planning when compared to baby boomers. About 60% of Gen X has some sort of retirement savings or investment account. They still likely don’t have enough saved though, and many Gen X-ers will rely on social security like baby boomers. More than likely millennials won’t have that luxury.
The average millennial started saving for retirement at age 23, almost 10 years sooner than boomers and 4 years sooner than Gen X. In terms of amount saved, the average millennial has around $25,500 in a retirement savings account, but only around a third of millennials have any sort of retirement savings at all. $25,000 sounds like a lot of money, but that’s not even enough for a millennial to live off of for a year. Some studies have estimated that millennials need to save anywhere from 10% to 50% of their income in order to retire at 65. Because of the current state of money and millennial student debt, that is nearly impossible.
In order to combat the state of money and student debt, Millennials have a couple of options: suck it up and invest half of their income or invest in cryptocurrency. Tim Draper, billionaire venture capitalist and crypto enthusiast, recently sat down with Fox News to explain some of his thoughts about cryptocurrency and investing. He said “If you’re a millennial, you’ve got the world out there in front of you. What’s the future going to look like? It’s not going to be tribal anymore. It’s going to be global. It’s not going to be tied to geographic borders. It’s going to be open.” In another interview with the YouTube channel CryptoFinder, Draper explained that his short term predictions are just guesses and are often wrong, but his long term predictions have consistently been accurate. This gives hope to his comments to Fox News.
Now think about all of the technology in our lives today, we have smart homes, smart tv’s, smart phones, laptops that weigh less than 2 pounds, and all sorts of other fancy technologies. The one thing that isn’t on that list, though, is money. We are still using an old-fashioned system for money. Draper described the current system as an “old oldsmobile,” meaning it’s beyond outdated. Why shouldn’t we be able to do everything from our phones or our computers?
Draper makes a ton of other great points in both interviews, and we highly recommend you take a look at them (Fox, Youtube).
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Published at Fri, 31 Jan 2020 19:36:51 +0000
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