There’s a Business Insider article being passed around on social media right now that pisses me off. It’s yet another entry in a long line of financial advice pieces tut-tutting millennials for not saving money for retirement.
The article features a chart pulled from J.P. Morgan’s 2016 “Guide to Retirement” that conveys the drastic differences in returns one could have to live off of if they start saving at different stages of their careers. The sums for the hypothetical savers, Chloe, Lyla, Quincy, and Noah, vary dramatically.
Noah, who is portrayed as the goofus of the bunch, squirrels away $10,000 a year as cash from ages 25 to 65 with a 2.25% return for being such a stick in the mud. This leaves him a paltry $652,000 to live off of before his body kicks the bucket and he’s uploaded into singularity heaven.
On the other end of the spectrum, our poster child for fiscal prudence, Chloe, invests her $10,000 a year in stocks and is projected to retire with $1.87 million in assets to get her through her golden years. No eating cat food for Chloe!
The message of this and all the other oh-so-informative savings guides is clear: Millennials! Stop buying a new hoverboard and Oculus Rift and start putting that money into savings like a grown up!
So why aren’t we wayward youngins all stopping our Bumble swiping to heed this sound financial advice—and it is, without a doubt, sound—from our dear friends at J.P. Morgan?
This isn’t an easily remedied issue where, with just a few less lattes a month, we’re all back on the right path towards the retirement Promised LAND.
These models posit a reality that no longer exists and may never exist again, at least for currently living Americans. In case you hit your head in September 2008 and Rip Van Winkel’d your way to right now, America is in the throes of a recession, still—despite some reporting to the contrary. Wages remain stagnant while worker productivity has soared, leaving an embarrassingly large and growing chunk of working Americans unable to keep up with costs of living.
This is in addition to the massive debt facing most college grads. The average graduate is almost $30,000 in debt according to The Institute for College Access and Success. Compare this to the college of our parents’ generation, when a part-time job during the semester was enough to pay the drastically lower tuition costs. Saddled with little to no debt and entering a workforce that, even if begrudgingly, paid enough of a living wage for those in their mid-twenties to start saving, if not put a down payment on a modest house, we can see that these two situations might as well take place on different planets. It’s apples and rotten, hollow oranges.
Which brings us back to that spiffy retirement plan J.P. Morgan has set up for us, if only we had the discipline. The proposal in the original chart has the savers putting away $10K a year. That’s $833 dollars a month. Let that sit in for a minute. That’s more than most people’s rent. And rent or mortgage is already most people’s biggest monthly expense. Now, let me refer you to this map, also published by Business Insider, that lists the average millennial salary by state. Nobody’s pulling $833 dollars out of thin air when many are barely making double that per month. Good luck getting this generation to put away $100 a month when so many—more than will ever be reported on any chart—are limping across the finish line every single month with no end to the vicious and depressing cycle in sight.
This isn’t all to imply that saving is not an important exercise in discipline that everyone needs to undertake. Surely even more belt tightening measures could be taken by each and every one of us. But plans like the one proposed by J.P. Morgan are, at best, unhelpfully out of touch with current economic conditions. At worst, they condescendingly shift the blame to the individual.
This isn’t an easily remedied issue where, with just a few less lattes a month, we’re all back on the right path towards the retirement Promised Land. This is a systemic issue and we can have roundtable discussions all day about the chicken/egg of Millenial financial woes, but none of that equates to financial solvency and savings until wages increase.
But I get why there are so many bank-sponsored studies/pushes to get the 20-somethings saving. The banks’ current customer base is dying by the day and not likely to be replaced at a 1:1 ratio.
But you helped create the mess we’re in now, J.P. Morgan, and with many millennials having come to terms with the unfortunate reality that they’ll likely work until they die, you might stand to take as much of a hit down the road as we do.