The Investment Thread (3 Viewers)

[Saint_Ward]

I'm going to throw this in here for now. Interesting stats.

The Average 401(k) Balance by Age

How much money people have put away for retirement naturally varies by age. See how your savings stack up.

www.investopedia.com

How does that break down, more specifically? Here's how Fidelity crunches the numbers:

Twentysomethings (Age 20–29)

Average 401(k) balance: $11,800
Median 401(k) balance: $4,300
Contribution rate (% of income): 7%

Thirtysomethings (Age 30–39)

Average 401(k) balance: $42,400
Median 401(k) balance: $16,500
Contribution rate (% of income): 7.8%

Among millennials (which Fidelity defines as those born between 1981–1997), 38% of workers increased their savings in Q2 2019. This generation is the most likely to contribute to a Roth 401(k), too.

Fortysomethings (Age 40–49)

Average 401(k) balance: $102,700
Median 401(k) balance: $36,000
Contribution rate (% of income): 8.5%

The jump in the account balance size for Gen Xers could reflect the fact that these folks have logged a good decade or two in the workforce, and have been contributing to plans that long. The slightly larger contribution rate may reflect that many are in their peak earning years.

Fiftysomethings (Age 50–59)

Average 401(k) balance: $174,100
Median 401(k) balance: $60,900
Contribution rate (% of income): 10.1%

Then the link to Fidelity has this added information.

 

[jboss]

I'm going to throw this in here for now. Interesting stats.

The Average 401(k) Balance by Age

How much money people have put away for retirement naturally varies by age. See how your savings stack up.

www.investopedia.com

Then the link to Fidelity has this added information.

Also probably worth noting how inflation is going to affect the numbers long term and also the inevitable market decline. Seems grim for future retirees at large imo.

I'd like to see Vanguard's numbers. They seem to be the leader as far as 401k/Roth retirement plans go. Hell, even ETFs, mutual funds, etc. outside of retirement plans, from expense ratios to historical performance, they got the juice. I feel very fortunate to have Vanguard as part of my employer plan.

Edit side note: RIP pensions, we (millenials and gen z) hardly knew thee.

 

[Saint_Ward]

 

[B4YOU]

I'm going to throw this in here for now. Interesting stats.

The Average 401(k) Balance by Age

How much money people have put away for retirement naturally varies by age. See how your savings stack up.

www.investopedia.com

Then the link to Fidelity has this added information.

The most useful data from this is the savings rate. Fidelity is including balances but I'm skeptical about how accurate those numbers would be for a person like myself who has accounts with multiple service providers. So age 20-40 are saving 7.4% which is 1-2% above match on average, Gen-X is saving about 9%, and age 60-70 are saving 11.2% in their "oh no I didn't save enough" years.

I think the TransAmerica survey is interesting. Millennials are saving 10% of their salary and started at age 24. Gen-X is saving 8% and started at age 30. Boomers started saving at 35 and are saving 10%. Almost 1/3 of Millenials and Gen-X have taken a withdrawal from their retirement account. Boomers will benefit from pensions and higher SSA rates.

These savings rates for Gen-X are scary. This group should be at a 13-15% rate. They are going to struggle if during their peak years they can only put aside 8%.

 

[Saint_Ward]

I'm at 6%. I was at 12-15 at my old job. But my balance is fiya! Ha.

Also, the equity builder helps, it's like getting an extra 2% or so on top of the 3% match.

 

[superchuck500]

The most useful data from this is the savings rate. Fidelity is including balances but I'm skeptical about how accurate those numbers would be for a person like myself who has accounts with multiple service providers. So age 20-40 are saving 7.4% which is 1-2% above match on average, Gen-X is saving about 9%, and age 60-70 are saving 11.2% in their "oh no I didn't save enough" years.

I think the TransAmerica survey is interesting. Millennials are saving 10% of their salary and started at age 24. Gen-X is saving 8% and started at age 30. Boomers started saving at 35 and are saving 10%. Almost 1/3 of Millenials and Gen-X have taken a withdrawal from their retirement account. Boomers will benefit from pensions and higher SSA rates.

These savings rates for Gen-X are scary. This group should be at a 13-15% rate. They are going to struggle if during their peak years they can only put aside 8%.

Yeah, cause we actually moved out of our parents houses when we were supposed to.

 

[Saint_Ward]

I don't want to get on too much of a tangent here, but savings rates are only one factor, and percentages are misleading.

I was talking to one of our technicians. We were talking about pay and how we all feel like we're underpaid (we are though). We've seen people switching companies and making really nice pay increases.

I told him they're criminally underpaid. I feel like They should be making $3-5 more an hour. And when I complain about being underpaid, it probably falls on deaf ears to them, since they are worse off. This all lead to our discussion on bonuses. We can earn up to 10% of our salary in a end of year bonus. I've gotten that or near it the last few years. They usually hover around 5%. (I didn't tell him I get more like 8-10%). But, the point of this, was that, what we jokingly said was.. (from his perspective), well your (engineer) 5% is a lot more than my (tech) 5%. and that when you're making lower wages, a % raise shouldn't be stuck at 3%, it should be looked at as a $0.50 raise an hour, or $0.75, or $1.00/hr raise. Percentages don't matter much under $20/hr.

So, a percent of salary that is going towards a 401k (hopefully with a company match) is one factor, but it's not the end of the world if it's low. For me, I'm at 6% (to get the full company match of 3%). And almost every year they give an extra bonus of company stock (they call it equity builder), of like 2% or so in the spring. And of course, someone making 40k/year putting 12% away vs someone making 80k/year putting 7% away.. the second person is putting more actual money away.

the other factor is where the company match goes. Most goes towards company stock. Some of if is flexible (i.e. you can pick where you want it), others aren't. For my company, it must go to company stock, but you can transfer it out. but, since our price has grown about 20% y/y, it's pretty stupid to pull out of it. When I was at Lockheed Martin, it was a 4% match.

The other factor is timing. We can't control that, but Gen X has gone through two sizable market downshifts/crashes. They've had a good amount of time to buy in at the lower price levels. So, while their savings rate as a percentage of salary is lower, their balances may not reflect that. It would be interesting to see balance distribution as a function of age group.

But it is funny. I was saving at a higher rate when I was young and single, than I am now.

However, next raise, I do want to bump it up.

All that being said, I've been working for 16 years in two different companies that both offered 401ks with a match. When I consolidated my 401ks together, I only skimmed a tiny amount off the top. But today, I'd put my 401k balance against most my age.

 

[jboss]

Yeah, cause we actually moved out of our parents houses when we were supposed to.

Suckerrrrrrs

 

[B4YOU]

So, a percent of salary that is going towards a 401k (hopefully with a company match) is one factor, but it's not the end of the world if it's low. For me, I'm at 6% (to get the full company match of 3%). And almost every year they give an extra bonus of company stock (they call it equity builder), of like 2% or so in the spring. And of course, someone making 40k/year putting 12% away vs someone making 80k/year putting 7% away.. the second person is putting more actual money away.

Yep. Companies should be providing a flat $ amount per employee instead of %-based retirement system based on employee contributions.

My employer provides 5% regardless if you contribute or not. I was maxing my 457 prior to buying a home but dropped to 13.7% afterwards. As a Xennial with a decent salary in a HCOL area, 13.7% isn’t enough even with 5% on top of that.

On the investment topic, I wish I never put a penny in international mutual funds. Seeing little to no growth over the last few years compared to US investments is painful given my retirement funds are 15-20% international.

 

[efil4stnias]

Yep. Companies should be providing a flat $ amount per employee instead of %-based retirement system based on employee contributions.

My employer provides 5% regardless if you contribute or not. I was maxing my 457 prior to buying a home but dropped to 13.7% afterwards. As a Xennial with a decent salary in a HCOL area, 13.7% isn’t enough even with 5% on top of that.

On the investment topic, I wish I never put a penny in international mutual funds. Seeing little to no growth over the last few years compared to US investments is painful given my retirement funds are 15-20% international.

Can you not adjust it?

 

[Saint_Ward]

Wow DIS popped today. 10M Disney+ subscriptions. Up almost 8%.

 

[B4YOU]

Can you not adjust it?

I can but suffer from sunk cost fallacy and fear of buying high. My IRA was 2/7 international when I rolled it over and just left it in that state. It’s now 15-20%. I wish I would have rolled everything into VTSAX instead.

 

[B4YOU]

Wow DIS popped today. 10M Disney+ subscriptions. Up almost 8%.

That’s a lot of parents with small kids desperate for a brief respite.

 

[efil4stnias]

I can but suffer from sunk cost fallacy and fear of buying high. My IRA was 2/7 international when I rolled it over and just left it in that state. It’s now 15-20%. I wish I would have rolled everything into VTSAX instead.

sit tight til Dec which is when most funds see a decline after dividends paid. Might be beneficial to move then. ( not as big of loss costs )

 

[Saint_Ward]

I can but suffer from sunk cost fallacy and fear of buying high. My IRA was 2/7 international when I rolled it over and just left it in that state. It’s now 15-20%. I wish I would have rolled everything into VTSAX instead.

Just do a rebalance. You don't have to do a wholesale change.