It shouldn't be called retirement. It is probably more like a temporary hiatus.
Also, it isn't just 20-somethings. US employment has been somewhat of a raw deal in the last 15 years for all age groups. Some people have realized that working to live just isn't worth it.
There's a lot of bullshit work assigned in a typical corporate job, and this 'impedance mismatch' forces some people with financial strength to quit and do what they really want to do in life even if that means living on a much lower annual income.
In personal finance it's called, "Financial Independence." Which basically means you aren't necessarily done working for the rest of your life, just that working has become completely optional.
Sometimes I wonder whether the next generation will even have parents who have houses with basements available for free/cheap. Maybe basements would be rented out to support family expenses. Or their parents could be living in much smaller places with no basements.
Lately I have seen a few ads where owners are looking to rent out basements to families as cheaper alternative to apartments rather than as something where single folks would stay for short durations.
> Optional - as long as you live in your parents' basement and don't want to start a family. :-)
I think this is where there's a fundamental disconnect in cultures.
I'm 33, my wife 31. We're about to have kids, and we've strongly considered moving in with my parents, not only to spend more time with them, but also to provide care when necessary as well as have their help watching and raising our children.
Just because we're well off (we're financially independent) doesn't mean we need an expensive mortgage in the suburbs to raise our family, nor does it mean we can't live with family or have them live with us.
I come from a culture with close multi-generational ties, so I don't think there is anything wrong with your potential decision at all - if it is your _choice_, not _necessity_
I definitely agree it should be by choice, but that's only going to change in the US if workers start fighting for higher wages, more labor regulation, and other initiatives that value labor above capital.
No one needs to move to the suburbs and take on an expensive mortgage to raise a family. An apartment or small condo is a fine place to raise a family, and millions of Americans do just that.
It's just a cultural thing: many Americans prize their independence and privacy, so grown kids want to get away from their parents.
And vice versa, by the way! My parents definitely would not want me to move my family to their house--they love us and enjoy visits, but are enjoying their own independent lives too.
The premise of "financial independence" is that you save enough enough money and reduce your expenses enough that you can live for the rest of your life on your investments. Whether you choose to retire or not is up to you, but the point is that you are 'independent' of sources of income to fund your lifestyle. For example, you could reduce your working hours to spend more time on family or hobbies, or take long unpaid sabbaticals, or bootstrap a business, or just quit working entirely.
It turns out that you can safely withdraw 3% a year indefinitely (from a portfolio composed of a mix of stocks and bonds in low-fee index funds) without reducing the the value of the investments in the long run. A higher rate of 4% will decline on average over time but can be enough to survive multi-decade retirements, so that's often a more realistic target. There are tools (e.g. http://www.firecalc.com/, http://www.cfiresim.com/) to run simulations based on historical market data.
At 4% you need a portfolio equal to 25 years worth of expenses. Let's say you spend $60k a year in today's dollars. This works out to a monthly budget of $5k. If you can save $1.5M then that will pay your expenses for 30 years, without any other income, with a 94% chance of success. At 3% you need 33 years of expenses, or $2.0M, and that has a 100% chance of success. This is all based on past data of course (past performance does not imply future performance and all that).
These are large sums of money, but it's possible for most professional workers, and especially couples, to accumulate them if they are fairly frugal and make a decent income. The time required entirely depends on what portion of your income you can save (see http://www.mrmoneymustache.com/2012/01/13/the-shockingly-sim...). Assuming a constant income, as well as constant expenses while working and after, if you save 50% of your household income it will take 17 years to reach the 4% level. So start at age 30 and you'll be done by 47.
They're defining retirement as "you don't have a job and aren't looking for one", which is an egregious stretch of a definition. They're not financially independent or retired, they've given up looking for work worth doing.
If they're neither working nor financially independent, what are they living on? Not a rhetorical question; I don't live in the US, and am a bit vague about its welfare system.
Is this essentially about people moving back in with family?
We have nothing approaching basic income or housing that anybody could live off reasonably. Either these kids are living with parents, living off parent's money, or are living out of their cars. There is no in between here. I suspect that it's the former, which is really giving an awful impression about what is possible in the States. The vast majority of Americans need to work their asses off just to make rent. If you don't do that, you are either living off someone else's money, or don't have a house. End of story.
>We have nothing approaching basic income or housing that anybody could live off reasonably.
State welfare programs, section 8, food stamps, "earned income credit", medicaid, SSI, TANF, SNAP, etc. There's lots of aid in the US. Over 100m people nationally are on some level of means tested welfare. That's pushing one third of this nation. National spending accounts for $1T in welfare spending. That's slightly less than Mexico's entire GDP; a country of 122m.
The narrative of the US not having any welfare is asinine. In fact, the spending is staggering. When I lived in poorer neighborhoods in Chicago, most of my neighbors were on a fair amount of welfare to the point where they never had to bother getting a job. If you're willing to live in an urban area and live a modest lifestyle its largely trivial to game welfare benefits for a living.
I really don't think that cato is in the ballpark of being an objective source on welfare, though I don't have a reason to disagree with the number you mentioned. I'm having trouble calculating a max SNAP/food stamps benefit that would exceed $194/month for an individual in urban NYC. Is that modest? Sure, I bet there are some people who are satisfied living off of public welfare alone. They exist in every country, and probably in greater numbers in more-socialized countries. I'm unconvinced that the problem is big enough to warrant cutting any public-welfare programs. Some level of "mooching" is expected.
For me, when I was growing up on food stamps and welfare as a refugee, I know that it wasn't a level of living my family wanted to settle at. Evidently, neither does most of the country. The assistance helped us get settled and avoid a situation that surely would have resulted in us being thrown to the streets.
For one, they could actually be looking at jobs but passively. i.e. if you check the newspaper or websites for jobs, but didn't apply to any, you're not counted as 'looking for a job', so you're not unemployed either even though you obviously are. Passive job search is not included in the figures.
Other than that, note that unemployment is measured in periods of 4 weeks. i.e. if you have a consulting gig for 8 months, and are then out of a freelance job for 5 weeks (after which you get another gig), and get interviewed during that time, you'd be unemployed, despite the fact you may have earned a normal annual income that year.
Anyway, that's just to say that unemployment numbers may be off. It doesn't answer your question yet.
But indeed there are also people who can't provide for themselves and are considered unemployed. A lot of them live at their parents, another significant chunk is simply living on debt. Creditcard debt is huge in the US.
Most likely they live with other family members, either parents or elderly family who wouldn't mind a helping hand around the house in exchange for free rent.
Previous generations had two reasons to move out and rent on their own - marriage and health insurance. Nowadays Americans are marrying at much lower rate, and parents can keep kids on their insurance until the age 26.
So maybe this is the new normal, and the previous status quo of 20-something moving out and getting a job immediately was a distortion.
No, that's not it - of the people 20-24 who "don't have a job and aren't looking for them", the number of people who said it was because they were retired doubled. Other answers were "disabled" and "staying at home". That being said, I don't see how anyone can retire at 20-24 - if it was 30-34 it'd make a lot more sense. . .
There's no category for "I believe that the notion of 'lifetime employment until age 65, upon which you get to enjoy the life you've saved up for if you still have the health for it' is outdated, and choose to take my retirement in chunks of a year or two interspersed by periods of productive, lucrative work."
One of the side effects of moving to a fluid labor market is that you can basically get a job whenever you want. Moreover, you're forced to, and you're forced to stay up-to-date with market conditions so you can get a new job at any time. If you have to make this bargain anyway, who's to say that those jobs need to be contiguous? Why not take a job paying $90K for two years, live as if you had a job paying $60K, and then take a year off to travel?
My wife and I both did variants of this (her: bond trader => Peace Corps, me: financial software => startup => Google => startup), but we took our downtime in socially sanctioned, labeled ways and so don't fit into the "retired" statistics. But what about, say, the friend of mine who interned on a salmon fishing boat, took a job in economic consulting, did a multi-year sex tour of Southeast Asia, and now runs a hedge fund there? Or the friend of mine who runs a profitable SaaS remotely and is now doing Hacker Paradise, traveling the world? Where do they fit into the employment statistics? "Retired" is a lot better descriptor than "disabled" or "staying at home".
The numbers in the BLS report were on the order of 1-2%; I could easily believe that 1-2% of 20-24 year olds are doing gap years, or have software businesses that generate passive income, or have worked for a year or two at a lucrative profession and now saved up enough to travel the world.
Nope, that's the definition for being out of the workforce. They asked those people why they weren't looking, and 2% of them said that they were retired.
A lot of people found a way to live on low income obtained from parents, disability benefits, temp jobs, renting out grandma's apartment, etc. Sharing apartments or living with their parents, etc.
Given that a lot of job growth in the economic "recovery" (especially for younger people) has been in the minimum wage range, I don't blame them. If you can't even pay the most basic bills from a minimum-wage job to live independently, why bother?
Switching companies every 3 or 4 years is the new normal - you can't expect to ever get promoted within the same company. There's still upward mobility - its just that it's within an industry, not an individual company.
But I'm still a lot less likely to accept crap work just to hope that I get promoted later. The expected value of the upside is smaller, so should the downside be.
If your labour has market value and you're taking crap from your employer, shop around for a new job. The other way of saying that we don't have lifetime employment anymore is that we don't have to suffer through lifetime employment anymore.
You don't have to tolerate stultifying bureaucracy. You don't have to suffer nitwit bosses. You don't have to deal with impossible coworkers. With an open labour market, you can work where you like.
A couple of days ago someone posted patio11's blog article on his experience working in Japan as a salaryman. The other side of the security of lifetime employment over there is that you have to tolerate horrible working conditions at your lifetime employer, and the labour market is so rigid that if you ever leave your employer, no one else will ever hire you.
Which was true for the last generation, when you were supposed – and did – put up with the bullshit, because the company would care for you and offer you employment until retirement, and afterwards offer an adequate pension.
Nowadays, in far too many companies all you get for hard work is getting downsized. I can't blame people for not wanting to put up with that, and there's not nearly enough reasonable companies around.
You sound like a twenty-something whose historical perspective is lacking. It's been at least several generations, probably more, since that kind of job (expected lifetime employment with pension) has been widespread.
You sound like a twenty-something whose historical perspective is lacking. It's been several generations, probably more, since that kind of job (expected lifetime employment with pension) has been widespread.
Which was true for the last generation, when you were supposed – and did – put up with the bullshit, because the company would care for you and offer you employment until retirement, and afterwards offer an adequate pension.
I'm 40 now and I certainly didn't get a company to "care for" me; that promise went away generations ago. The last time anyone was hiring on those terms was maybe the 70's. Three generations have gone by since anyone pretended that lifetime employment is actually still a thing.
Working to live just isn't worth it? What does that leave you with?
When I started working I worked jobs I didn't want to do for the rest of my life, but it wasn't just about the money. I leaned skills, learned to work and learned I better find a new, better job - even if it is only slightly better. Some jobs only leave you with one important thing - a work ethic, and that is what gets you a better job, someday. I know, I'm just one person, but that is my story and I'm sticking to it. Maybe it will only get one person off their butt and doing something they don't enjoy.
How long are people going to pretend that the lack of full employment for now close to 40 years everywhere across the globe is the fault of people being "too lazy" to work?
You can't fix globalization and automation with personal work ethics.
Financial Independence and accepting to live off $22-35k annually. Unless you have a larger investment pool or a well-above-average and stable ROI to increase that beyond 35k...
There's a lot of bullshit work assigned in a typical corporate job
What jobs don't have that? As if startups magically solved this problem by giving employees nothing but innovative thought provoking problems and everything else is handled by worker elfs. No, every place has its share of bs work. the difference is that a portion (majority?) of corporate folks stopped caring to actually solve problems. Instead they do the minimum to keep their jobs. You can do the same thing every day, waste 30% of time chatting with coworkers, another 30% on the net, and then complain about how boring your job is. I've yet to see corporations that didn't have good problems to solve.
Almost every not-typical-big-corporate job has less bullshit work assigned than the lot of BS assigned to typical big corporate job workers. Startups and even mid-size companies don't magically solve the problem of having to do BS work, there's typically just a lot less of it. When what you do or don't do is all up to you, the portion of BS work goes to 0 because you don't want to do it so you don't. Companies fall on a BS scale that correlates to their size and determines how much BS work you don't want to do that you have to do anyway (or rather, you always have a choice, but if you don't do it then you're fired/the company goes out of business/a customer is pissed off and sues you/etc. which makes it not much of a choice at all).
I've worked at larger co's (1k+ employees) where BS work was actively eradicated in order to have breathing space to move forward and innovate. This is possible but requires vigilant management and hiring the kind of people that want to make a difference. There's more red tape at corps which may be part of the BS you're pointing out but even that was actively fought. I see it similar to technical debt. It's easy to accumulate if you're not careful and easy to live with at first but will slowly come back and take you down.
I would describe your experience as atypical, wouldn't you? Just like Valve's nearly-flat management is atypical and requires a certain mesh of personalities and pruning to work at all. Counterexamples exist, it's not a perfect correlation, but unless they're plentiful they don't really change the typical.
You do have a point. I suppose that is why you generally make more working at a corp, to either deal with the BS or ideally figure out a way to solve it which is never easy. All I was saying is that there are ways around it and long term solutions that work if you're willing to sink your teeth in and try to improve the status quo. The feeling of looking back and seeing that 80% of BS from last year was eliminated can be quite satisfying even if you're not at a game changing startup.
Yea, I am sure the percentage of 20-somethings who are actually financially independent is less than .0001%. Everyone else inherited money or gave up all hope of finding a real job.
Even worse, he said of 20-somethings (not out of the whole population, and not just 20 year olds) which leaves a start number around 45 million, or a mere 45 people in the USA.
It's actually pretty easy to become financially independent before you hit 30 if you finish college on time (while you're 23) and get a 6-figure job out of college, and work for a few years with a small (sub-25k/yr) annual cost of living.
It's also "actually pretty easy to become financially independent" if you hit the lottery. Both our examples aren't really conducive to an actual discussion.
1. The number of fields allowing a new grad to get a six-figure job are very small.
2. The number of places offering the above while also allowing the new grad to live in an area where they can have a sub-$2k/mo footprint are incredibly limited.
3. Of the people who are actually able to take advantage of the above, the majority of them will have no interest in doing so. For every highly-compensated employee at Google living in a van in the parking lot there are several in houses they can't afford with credit card and student loan debt to boot.
4. Gaining financial independence for the sake of gaining financial independence is sort of a pointless goal.
My guess is if you collected every person in the US who retired by the age of 30 and removed those who inherited money, won the lottery, and started a business, you could fit them in in a single large room.
It's far easier to do a CS degree and get hired as a software developer (while not blowing your income on insanely high rent in San Francisco city-proper -- yeah you'll have to suck up a commute, live with roommates, or live almost anywhere else with a tech scene) than it is to win a lottery sum over $500k-600k. And there are more options than software -- just because the number of fields is small doesn't necessarily make it any harder if those fields are in high demand and you have the ability to work in them. This is actually conducive to an actual discussion, on HN, because a lot of us here have done this, are doing it (may have passed 30 though), or are still in high school and looking to do it.
Re 4. it's only pointless if you foresee nothing afterwards. To me there's nothing wrong with wanting to have "fuck you" money (not just being "independent") without really knowing what you'll do when you get it, you can figure that out later and you'll have many options available to you -- a lot of us just keep working, with the added benefit of being able to drop unsatisfying jobs without any anxiety of not being able to find a new one.
Nope, just very close to the fully financially independent group under 30. I work for a living.
Not sure that you understand that financial independence can be just as simple as a function of your total invested assets and expected future annual costs given the reasonable assumption that in the long run your investments will net you at least an average 5% return per year. Is that assumption guaranteed to hold? No, but it's reasonable, and that's what buffer room is for. My rent is $1300/mo, with utilities it's usually around $1500/mo, for a 3-floor house I share with a friend. With miscellaneous other expenses like food and entertainment I end up with living expenses in the neighborhood of $25k/yr, rent is my primary expense since I have no debt. When my investment assets reach $600k, 5% growth nets me $30k/yr (I'm ignoring taxes). So long as my average annual expenses does not exceed $25k/yr, and my average return stays at or above 5%, this is sustainable indefinitely.
And this isn't the only path to financial independence, it's just really straightforward for higher-than-average earners not burning an insane amount of their income on rent. (Mortgages are a different story.)
$25k a year covers about half the rent in a place where you will get paid six figures after school. I am not sure you know what financially independent means.
You can get a studio apartment in the Greater Seattle Area for as low as $700/mo, though you should probably estimate around $1000/mo to be conservative. Additionally if you have a roommate (and maybe a bigger place, up to you how much you want to save vs. how comfortable you want to live) you cut your rent in half. Look wider than San Francisco -- if you're spending $50k/yr on rent, even in San Francisco, you're insane.
> if you're spending $50k/yr on rent, even in San Francisco, you're insane.
Or maybe you want to live in a nice high end 1br condo in the heart of the city within walking distance to work and enjoy a higher standard of living because you can easily afford the $50k and still have plenty of money left over for living expenses and savings/investments?
Or to quote your earlier sentence, shouldn't it be "up to you how much you want to save vs. how comfortable you want to live"?
Seems about right. Wow this site is full of people with delusions of grandeur. It's hilarious how people wonder why others hate techies.
News flash, not everyone is in software. If you are I still doubt you are actually independently wealthy. Again, unless you were born that way.
Sorry for not doing a mathematical proof for those of you that think having $50k in the bank by the time you are 30 is independently wealthy when you haven't even put a down payment on a house in SF yet.
John Keynes and the 15 hour work week make the news rounds every now and then: http://www.npr.org/2015/08/13/432122637/keynes-predicted-we-...
Perhaps we were wrong in predicting that he was entirely wrong. Obviously, companies themselves aren't going to be huge proponents of providing "part time" workers with full time benefits or providing opportunities for occasional employment, but people are finding ways through more creative methods that may not quite register as "in the workforce" according to the Bureau of Labor Statistics. People stay in school for much longer because they can afford to (okay, yes, student loans are a problem, but there's also not a critical "you must be in the workforce otherwise your family farm will fail and everyone will starve" motivation), how hard they work is more often seen as an "option" rather than a survival need.
> When you're in your twenties you should be spending that time really exploring and thinking about the things that give you meaning. Once you start growing up and living a life more you won't be able to do that again. -Digit CEO (from video)
I hate the idea that once you leave college and get a job your life of having fun is over. As though fiscal irresponsibility is necessary for finding your life's "meaning" and you can only do that in the four years you spend at college. I really have to question someone that found their life's meaning at a point in their life where they couldn't bother to be financially responsible for themselves.
If you want to make enough income to have financial security in the US in most industries that means taking a salaried job, and ~15 days of personal time off not including weekends and holidays. Its not that having to work 40 hours a week doesn't leave time enough to find your life's meaning, but its damn hard to do more than attend 2 major outside-of-norm events or go on any journeys that aren't majorly bookended by going back to work.
I hate the other end of that idea (reality) - that you have to grow up and be responsible and stop having fun or be spontaneous in your life, because from now on it's career, marriage, career, kids, career, retirement and death.
I hate the idea that once you leave college and get a job your life of having fun is over. As though fiscal irresponsibility is necessary for finding your life's "meaning"
It's not necessary, it's just that the market forces have made it such that fiscal responsibility is tightly bound to spending most your productive time, energy and drive at working. People barely have time to for family next to work. Think the market allocates people time for existential searching? That doesn't make someone else money; so, no, it doesn't.
It's not, though - market forces have made it such that fiscal responsibility is bound toward making more money than you spend. And you make money by generating value for other people. If you can generate & capture more money than the average person captures, but live like the average person, then the surplus becomes available for any existential searching you want.
I interpreted that as meaning that it's just easier to be a free spirit when you are younger. One you are married/have kids/get older, options start closing.
I think you got this backward. "Having fun" is not the same thing as "exploring and thinking about the things that give you meaning." In fact those thoughts are opposite.
The point is to start living intentionally. If you know what you value and want in life, it's easier to set goals and meet them--whether it's your education, your job, where you live, your finances, what experiences you have, etc.
People who don't start thinking about this when they're young might find later on in life that they've drifted into a situation that's hard to get out of. Like it or not, a lot of barriers are lower when you're 20--physical, cultural, financial. Once you're a lot older, there is no way to go back.
Agreed, and the video in the article had some advice that needs updated. What 20-year old is going to spend less because their credit card is frozen in a block of ice? I don't touch mine that often. There are so many ways to pay, service that already have the card number. It isn't a bad idea, just a bit out of date. I think I could freeze mine for most of the month and not change anything and I don't use cash.
As a bonus, if you accidentally scroll down far enough to kick off the here's-a-random-unrelated-article misfeature, then you're rewarded with a second autoplay of the video!
Nothing gets in the New York Times unless it interests people over 50. Back when the boomers were young there were huge numbers of article about hippies, drugs and all that stuff because old people like to read about what young people are doing and try it out for themselves. It makes them feel young. Old farts have been obsessed with iTunes, iPhones, iPads, and all that i-stuff for Apple as long as they've been making it.
I think people of all ages and social classes are in a bad mood these days.
I saw some rich guy on CNBC this morning and he was pissed because we don't appreciate everything rich people do for us and it is not hard to find pissed off poor people. Lots of old people like Trump because they are pissed off about this or that.
People are pissed off about health care, obamacare, etc. It is so ungrateful when you consider that 200 years ago people had no idea why infectious diseases made you sick, there were no painkillers, no psych meds, no blood pressure meds, no insulin or thyroid hormone. No antibiotics, antivirals, no heart surgery, warfarin, etc. For almost all of human history faith healing was the first line treatment for everything and now people are pissed.
People get pissed off driving and don't think it is a miracle that we have cars, roads, gas, mechanics, etc.
Anyway you've got to get over this idea that any generation is special; often it is much more like 10% of the boomers did it, and 30% of X, and 50% of Y and 70% of the Millenials do it -- most generational change is a "diffusion of innovation" situation.
If you want to understand the post 2000 period you have to understand the 1960s and 1970s and a good book from that era is
and it explains a lot of things like the hippie phenomenon and then the cult boom, school shooters and why people who don't have it bad join ISIS, all that. It is also the first academic book to use the word "postmodern".
He says "Our age inspires scant enthusiasm." and that is it. People don't really believe anything they are told and just go through the motions. For instance, look at defined contribution pensions. There has been Republican FUD against Social Security since it began, and now we have these private plans which might work if people had money to put in them, and some of us are fortunate enough to do so, but a lot of people live paycheck to paycheck -- personally I still think investing in the stock market is the best massy thing to do, but looking at the chart of the last 20 years I am not going to blame anybody who thinks it is a casino.
People are not committed, they are not engaged, they don't feel like stakeholders, they don't feel that they are valued, they see organizations such as schools, colleges, the military, corporations as exploitative, treating people like racehorses, burning them out, throwing them away.
At my local startup incubator there was this conversation I just couldn't take from some guy who had all this bullshit and weird ideas about networking and at some point it's like "bud... if you are talking to a VC they want to hear you are working on product and talking to customers"
Yet, disengaged people see something like "Y Combinator" and they see it like Harvard Business School, a credential, social proof because if you are disengaged you aren't experiencing the joy of learning, creating, etc.
Funny. Faith in institutions created a great society. People worked together for the common good. Then, the corruption and abuses of power in those institutions left that society disillusioned; uncommitted. Everyone became disengaged and individualistic. What happens after that? It really seems like a pattern in large social structures. Maybe it isn't, though. It's hard to say without generational bias. Any sociologists want to chime in?
In the modern era that can't happen because we've fine tuned mass media and marketing and educational indoctrination such that there is only one correct culture, that being the culture of the recent past. The one true life path was laid out for you before you were born, and if the world doesn't cooperate, you need to try harder.
In the long run you can't stop cultural transformation, but trying to hold it back via weird new artificial technologies means when it does snap it'll be a doozy, make the '60s look positively tame in comparison. Imagine trying to advance, say, 50 years, in a just a couple years. Things that work will be fun; things that crash and burn under the intense acceleration will not be so fun.
The snap will likely be fairly unpredictable. For example the dominant culture today is intensely progressive. The snap will almost certainly not be perfectly in phase or perfectly out of phase with progressivism.
They're not retired. They're probably selling drugs. Not kidding.
We have a lot of drug selling inmates (0.5% of Americans are in jail for drugs). It's also an industry people can get jobs in without experience and that booms in a recession. These retired kids are probably being honest in saying they're not just 'staying at home'. They're probably selling drugs. It's a job. Just not one they want to list on a survey.
I know a guy who was an IT generalist making decent money, who met and married a woman who is a physican when she was in med school. Her first gig was to an impoverished rural area (to accelerate payments of med school loans), so he quit and went with her.
Now he's a 30-something stay at home dad. He does a few remote consulting gigs, more to stay in touch than for the money.
Totally anecdotal: A few months ago a friend was down by the Mississippi river park in downtown Minneapolis where there were a group of young homeless guys drinking under a bridge trestle. Turns out these guys had undergraduate degrees with massive student loan debt. They explained they'd decided to become homeless because they didn't see any way to ever pay it back.
The numbers involved are extremely small. Twice nothing is still roughly nothing. My suspicion is at least some young women married an (older?) guy and are doing the stay at home mom thing. Its not like the economy is booming, they're not missing out on anything. "Maybe when the economy is better, and my kid is in preschool, my art degree will really pay off"
Summary: the percent of people aged 20-24 who answered the survey an employment survey as "retired" changed from 1 to 2%. Bloomberg then finds a narrative and beats it to death.
Fewer people willing or able to take a job might eventually cause a shortage of workers, leading to surge in wages and longer-term inflationary pressures, according to Princeton University economist Alan Blinder, a former Fed vice chairman.
"We're going to be running out of labor as we go through time,'' Blinder said on Bloomberg Television Dec. 31.
Oh, my. I hadn't even thought of that. I guess we'll need to expand the availability of slave-labour employer-controlled visas and guest worker programs, won't we? Let's forward this to our lobbyist.
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[ 3.3 ms ] story [ 100 ms ] threadAlso, it isn't just 20-somethings. US employment has been somewhat of a raw deal in the last 15 years for all age groups. Some people have realized that working to live just isn't worth it.
There's a lot of bullshit work assigned in a typical corporate job, and this 'impedance mismatch' forces some people with financial strength to quit and do what they really want to do in life even if that means living on a much lower annual income.
In personal finance it's called, "Financial Independence." Which basically means you aren't necessarily done working for the rest of your life, just that working has become completely optional.
more info: https://www.reddit.com/r/financialindependence
Optional - as long as you live in your parents' basement and don't want to start a family. :-)
I think this is where there's a fundamental disconnect in cultures.
I'm 33, my wife 31. We're about to have kids, and we've strongly considered moving in with my parents, not only to spend more time with them, but also to provide care when necessary as well as have their help watching and raising our children.
Just because we're well off (we're financially independent) doesn't mean we need an expensive mortgage in the suburbs to raise our family, nor does it mean we can't live with family or have them live with us.
America is far more broken than I expected.
Otherwise, prepare to move to the basement.
It's just a cultural thing: many Americans prize their independence and privacy, so grown kids want to get away from their parents.
And vice versa, by the way! My parents definitely would not want me to move my family to their house--they love us and enjoy visits, but are enjoying their own independent lives too.
It turns out that you can safely withdraw 3% a year indefinitely (from a portfolio composed of a mix of stocks and bonds in low-fee index funds) without reducing the the value of the investments in the long run. A higher rate of 4% will decline on average over time but can be enough to survive multi-decade retirements, so that's often a more realistic target. There are tools (e.g. http://www.firecalc.com/, http://www.cfiresim.com/) to run simulations based on historical market data.
At 4% you need a portfolio equal to 25 years worth of expenses. Let's say you spend $60k a year in today's dollars. This works out to a monthly budget of $5k. If you can save $1.5M then that will pay your expenses for 30 years, without any other income, with a 94% chance of success. At 3% you need 33 years of expenses, or $2.0M, and that has a 100% chance of success. This is all based on past data of course (past performance does not imply future performance and all that).
These are large sums of money, but it's possible for most professional workers, and especially couples, to accumulate them if they are fairly frugal and make a decent income. The time required entirely depends on what portion of your income you can save (see http://www.mrmoneymustache.com/2012/01/13/the-shockingly-sim...). Assuming a constant income, as well as constant expenses while working and after, if you save 50% of your household income it will take 17 years to reach the 4% level. So start at age 30 and you'll be done by 47.
Is this essentially about people moving back in with family?
State welfare programs, section 8, food stamps, "earned income credit", medicaid, SSI, TANF, SNAP, etc. There's lots of aid in the US. Over 100m people nationally are on some level of means tested welfare. That's pushing one third of this nation. National spending accounts for $1T in welfare spending. That's slightly less than Mexico's entire GDP; a country of 122m.
http://object.cato.org/sites/cato.org/files/pubs/pdf/PA694.p...
The narrative of the US not having any welfare is asinine. In fact, the spending is staggering. When I lived in poorer neighborhoods in Chicago, most of my neighbors were on a fair amount of welfare to the point where they never had to bother getting a job. If you're willing to live in an urban area and live a modest lifestyle its largely trivial to game welfare benefits for a living.
>State welfare programs, section 8, food stamps, "earned income credit", medicaid, SSI, TANF, SNAP, etc. There's lots of aid in the US.
I question this response with the qualifier of "living off reasonably."
I'm certainly lucky enough not to need any of that, but from what I understand, it's barely subsistence existence.
For me, when I was growing up on food stamps and welfare as a refugee, I know that it wasn't a level of living my family wanted to settle at. Evidently, neither does most of the country. The assistance helped us get settled and avoid a situation that surely would have resulted in us being thrown to the streets.
For one, they could actually be looking at jobs but passively. i.e. if you check the newspaper or websites for jobs, but didn't apply to any, you're not counted as 'looking for a job', so you're not unemployed either even though you obviously are. Passive job search is not included in the figures.
Other than that, note that unemployment is measured in periods of 4 weeks. i.e. if you have a consulting gig for 8 months, and are then out of a freelance job for 5 weeks (after which you get another gig), and get interviewed during that time, you'd be unemployed, despite the fact you may have earned a normal annual income that year.
Anyway, that's just to say that unemployment numbers may be off. It doesn't answer your question yet.
But indeed there are also people who can't provide for themselves and are considered unemployed. A lot of them live at their parents, another significant chunk is simply living on debt. Creditcard debt is huge in the US.
Previous generations had two reasons to move out and rent on their own - marriage and health insurance. Nowadays Americans are marrying at much lower rate, and parents can keep kids on their insurance until the age 26.
So maybe this is the new normal, and the previous status quo of 20-something moving out and getting a job immediately was a distortion.
One of the side effects of moving to a fluid labor market is that you can basically get a job whenever you want. Moreover, you're forced to, and you're forced to stay up-to-date with market conditions so you can get a new job at any time. If you have to make this bargain anyway, who's to say that those jobs need to be contiguous? Why not take a job paying $90K for two years, live as if you had a job paying $60K, and then take a year off to travel?
My wife and I both did variants of this (her: bond trader => Peace Corps, me: financial software => startup => Google => startup), but we took our downtime in socially sanctioned, labeled ways and so don't fit into the "retired" statistics. But what about, say, the friend of mine who interned on a salmon fishing boat, took a job in economic consulting, did a multi-year sex tour of Southeast Asia, and now runs a hedge fund there? Or the friend of mine who runs a profitable SaaS remotely and is now doing Hacker Paradise, traveling the world? Where do they fit into the employment statistics? "Retired" is a lot better descriptor than "disabled" or "staying at home".
The numbers in the BLS report were on the order of 1-2%; I could easily believe that 1-2% of 20-24 year olds are doing gap years, or have software businesses that generate passive income, or have worked for a year or two at a lucrative profession and now saved up enough to travel the world.
Thew title of this post is a little misleading and the wrong question to ask.
Given that a lot of job growth in the economic "recovery" (especially for younger people) has been in the minimum wage range, I don't blame them. If you can't even pay the most basic bills from a minimum-wage job to live independently, why bother?
yeah its called being young and being inexperienced. Gotta put the time in before you're qualified to enjoy the meat..
If your labour has market value and you're taking crap from your employer, shop around for a new job. The other way of saying that we don't have lifetime employment anymore is that we don't have to suffer through lifetime employment anymore.
You don't have to tolerate stultifying bureaucracy. You don't have to suffer nitwit bosses. You don't have to deal with impossible coworkers. With an open labour market, you can work where you like.
A couple of days ago someone posted patio11's blog article on his experience working in Japan as a salaryman. The other side of the security of lifetime employment over there is that you have to tolerate horrible working conditions at your lifetime employer, and the labour market is so rigid that if you ever leave your employer, no one else will ever hire you.
Nowadays, in far too many companies all you get for hard work is getting downsized. I can't blame people for not wanting to put up with that, and there's not nearly enough reasonable companies around.
I'm 40 now and I certainly didn't get a company to "care for" me; that promise went away generations ago. The last time anyone was hiring on those terms was maybe the 70's. Three generations have gone by since anyone pretended that lifetime employment is actually still a thing.
When I started working I worked jobs I didn't want to do for the rest of my life, but it wasn't just about the money. I leaned skills, learned to work and learned I better find a new, better job - even if it is only slightly better. Some jobs only leave you with one important thing - a work ethic, and that is what gets you a better job, someday. I know, I'm just one person, but that is my story and I'm sticking to it. Maybe it will only get one person off their butt and doing something they don't enjoy.
You can't fix globalization and automation with personal work ethics.
What jobs don't have that? As if startups magically solved this problem by giving employees nothing but innovative thought provoking problems and everything else is handled by worker elfs. No, every place has its share of bs work. the difference is that a portion (majority?) of corporate folks stopped caring to actually solve problems. Instead they do the minimum to keep their jobs. You can do the same thing every day, waste 30% of time chatting with coworkers, another 30% on the net, and then complain about how boring your job is. I've yet to see corporations that didn't have good problems to solve.
There's probably more than 300, 20 year olds who are living off private incomes.
It's actually pretty easy to become financially independent before you hit 30 if you finish college on time (while you're 23) and get a 6-figure job out of college, and work for a few years with a small (sub-25k/yr) annual cost of living.
1. The number of fields allowing a new grad to get a six-figure job are very small.
2. The number of places offering the above while also allowing the new grad to live in an area where they can have a sub-$2k/mo footprint are incredibly limited.
3. Of the people who are actually able to take advantage of the above, the majority of them will have no interest in doing so. For every highly-compensated employee at Google living in a van in the parking lot there are several in houses they can't afford with credit card and student loan debt to boot.
4. Gaining financial independence for the sake of gaining financial independence is sort of a pointless goal.
My guess is if you collected every person in the US who retired by the age of 30 and removed those who inherited money, won the lottery, and started a business, you could fit them in in a single large room.
Re 4. it's only pointless if you foresee nothing afterwards. To me there's nothing wrong with wanting to have "fuck you" money (not just being "independent") without really knowing what you'll do when you get it, you can figure that out later and you'll have many options available to you -- a lot of us just keep working, with the added benefit of being able to drop unsatisfying jobs without any anxiety of not being able to find a new one.
Not sure that you understand that financial independence can be just as simple as a function of your total invested assets and expected future annual costs given the reasonable assumption that in the long run your investments will net you at least an average 5% return per year. Is that assumption guaranteed to hold? No, but it's reasonable, and that's what buffer room is for. My rent is $1300/mo, with utilities it's usually around $1500/mo, for a 3-floor house I share with a friend. With miscellaneous other expenses like food and entertainment I end up with living expenses in the neighborhood of $25k/yr, rent is my primary expense since I have no debt. When my investment assets reach $600k, 5% growth nets me $30k/yr (I'm ignoring taxes). So long as my average annual expenses does not exceed $25k/yr, and my average return stays at or above 5%, this is sustainable indefinitely.
And this isn't the only path to financial independence, it's just really straightforward for higher-than-average earners not burning an insane amount of their income on rent. (Mortgages are a different story.)
Or maybe you want to live in a nice high end 1br condo in the heart of the city within walking distance to work and enjoy a higher standard of living because you can easily afford the $50k and still have plenty of money left over for living expenses and savings/investments?
Or to quote your earlier sentence, shouldn't it be "up to you how much you want to save vs. how comfortable you want to live"?
News flash, not everyone is in software. If you are I still doubt you are actually independently wealthy. Again, unless you were born that way.
Sorry for not doing a mathematical proof for those of you that think having $50k in the bank by the time you are 30 is independently wealthy when you haven't even put a down payment on a house in SF yet.
I lived through my first two years of college with roommates, savings, part-time/off-book bartending/bouncing and changing my long distance service.
I hate the idea that once you leave college and get a job your life of having fun is over. As though fiscal irresponsibility is necessary for finding your life's "meaning" and you can only do that in the four years you spend at college. I really have to question someone that found their life's meaning at a point in their life where they couldn't bother to be financially responsible for themselves.
It's not necessary, it's just that the market forces have made it such that fiscal responsibility is tightly bound to spending most your productive time, energy and drive at working. People barely have time to for family next to work. Think the market allocates people time for existential searching? That doesn't make someone else money; so, no, it doesn't.
The point is to start living intentionally. If you know what you value and want in life, it's easier to set goals and meet them--whether it's your education, your job, where you live, your finances, what experiences you have, etc.
People who don't start thinking about this when they're young might find later on in life that they've drifted into a situation that's hard to get out of. Like it or not, a lot of barriers are lower when you're 20--physical, cultural, financial. Once you're a lot older, there is no way to go back.
I think people of all ages and social classes are in a bad mood these days.
I saw some rich guy on CNBC this morning and he was pissed because we don't appreciate everything rich people do for us and it is not hard to find pissed off poor people. Lots of old people like Trump because they are pissed off about this or that.
People are pissed off about health care, obamacare, etc. It is so ungrateful when you consider that 200 years ago people had no idea why infectious diseases made you sick, there were no painkillers, no psych meds, no blood pressure meds, no insulin or thyroid hormone. No antibiotics, antivirals, no heart surgery, warfarin, etc. For almost all of human history faith healing was the first line treatment for everything and now people are pissed.
People get pissed off driving and don't think it is a miracle that we have cars, roads, gas, mechanics, etc.
Anyway you've got to get over this idea that any generation is special; often it is much more like 10% of the boomers did it, and 30% of X, and 50% of Y and 70% of the Millenials do it -- most generational change is a "diffusion of innovation" situation.
If you want to understand the post 2000 period you have to understand the 1960s and 1970s and a good book from that era is
http://www.amazon.com/uncommitted-alienated-youth-American-s...
and it explains a lot of things like the hippie phenomenon and then the cult boom, school shooters and why people who don't have it bad join ISIS, all that. It is also the first academic book to use the word "postmodern".
He says "Our age inspires scant enthusiasm." and that is it. People don't really believe anything they are told and just go through the motions. For instance, look at defined contribution pensions. There has been Republican FUD against Social Security since it began, and now we have these private plans which might work if people had money to put in them, and some of us are fortunate enough to do so, but a lot of people live paycheck to paycheck -- personally I still think investing in the stock market is the best massy thing to do, but looking at the chart of the last 20 years I am not going to blame anybody who thinks it is a casino.
People are not committed, they are not engaged, they don't feel like stakeholders, they don't feel that they are valued, they see organizations such as schools, colleges, the military, corporations as exploitative, treating people like racehorses, burning them out, throwing them away.
At my local startup incubator there was this conversation I just couldn't take from some guy who had all this bullshit and weird ideas about networking and at some point it's like "bud... if you are talking to a VC they want to hear you are working on product and talking to customers"
Yet, disengaged people see something like "Y Combinator" and they see it like Harvard Business School, a credential, social proof because if you are disengaged you aren't experiencing the joy of learning, creating, etc.
https://en.wikipedia.org/wiki/Transformation_of_culture
In the modern era that can't happen because we've fine tuned mass media and marketing and educational indoctrination such that there is only one correct culture, that being the culture of the recent past. The one true life path was laid out for you before you were born, and if the world doesn't cooperate, you need to try harder.
In the long run you can't stop cultural transformation, but trying to hold it back via weird new artificial technologies means when it does snap it'll be a doozy, make the '60s look positively tame in comparison. Imagine trying to advance, say, 50 years, in a just a couple years. Things that work will be fun; things that crash and burn under the intense acceleration will not be so fun.
The snap will likely be fairly unpredictable. For example the dominant culture today is intensely progressive. The snap will almost certainly not be perfectly in phase or perfectly out of phase with progressivism.
We have a lot of drug selling inmates (0.5% of Americans are in jail for drugs). It's also an industry people can get jobs in without experience and that booms in a recession. These retired kids are probably being honest in saying they're not just 'staying at home'. They're probably selling drugs. It's a job. Just not one they want to list on a survey.
Now he's a 30-something stay at home dad. He does a few remote consulting gigs, more to stay in touch than for the money.
"We're going to be running out of labor as we go through time,'' Blinder said on Bloomberg Television Dec. 31.
Oh, my. I hadn't even thought of that. I guess we'll need to expand the availability of slave-labour employer-controlled visas and guest worker programs, won't we? Let's forward this to our lobbyist.