Millennials are racking up retirement savings in Roth IRAs

[Zorro]

Some savers have done what seems impossible.

They’ve managed to save $1 million or more in their workplace retirement accounts. I’ve written before about this trend and will continue to do so to encourage those of you who think you can’t save — but could if you made it a priority.

The number of people with more than $1 million in their 401(k) hit a record 233,000 at the end of 2019, up from 133,800 for the same period a year earlier, according to Fidelity Investments, one of the country’s largest administrators of workplace retirement accounts. The number of IRA millionaires increased to 208,000, also a record high.

There was also a record-setting jump in the number of million-dollar accounts in the Thrift Savings Plan (TSP), the federal government’s version of a 401(k). As of Dec. 31, there were 49,620 TSP millionaires, a 131 percent increase over the 21,432 reported at the end of 2018, according to the Federal Retirement Thrift Investment Board.

https://www.washingtonpost.com/business/personal-finance/millennials-are-racking-up-retirement-savings-in-roth-iras/2020/02/14/7f6de960-4eac-11ea-9b5c-eac5b16dafaa_story.html

[blueinredohio]

1. Kudos to them if they can do it but

I don't know any millennials who make near enough money to pay bills,rent,car,insurance and student loans. Much less food, clothes etc.

[WhiskeyGrinder]

2. Would love to see where they were starting from.

[Midnight Writer]

18. When they are starting may be more important.

Many younger workers don't prioritize retirement savings until they get older, concentrating on more immediate goals.

[WhiskeyGrinder]

19. "How" may have made more sense.

Their college loans, whether their parents helped out with a down payment on a home or gave them a car, how their health has been, that kind of thing.

[janterry]

3. I work with someone who is in Americorp

and makes next to nothing. She has a tiny apartment that she shares and has a 401(k).

She puts something away every other week on payday. (and, lol, she self-identifies as an anarchist

-v. nice young woman, btw

[llmart]

4. But how much is the "something"?

I was in charge of employees' retirement accounts as a benefits person in a small publicly funded organization. Most of the employees were women in a field noted for being low-paying. I still remember one of the women who signed up to have $15.00 a month deducted from her pay. I wanted so much to tell her that her efforts wouldn't amount to anything since she was 45 when she started and retirement age was 65. Of course I couldn't and wouldn't actually tell her that, but let's be honest here. In 20 years time she would only be able to afford her rent for a couple of months.

[janterry]

5. I have no idea but she already has

close to 30K in her savings. This is due to going to a state college (she's from FL) and saved money that way.

She's in her early 20's (I think just 24?)

[ck4829]

6. What are millennials 'killing' here though?

[GeorgeGist]

7. Just for clarity, there are an estimated 73 MILLION millennials.

So about 0.3% are doing well.

[Merlot]

9. Thank you for the math. That's what I was thinking.

A very, very small percentage of Fidelitys customers are doing ok so why can't everyone do the same?

[MissB]

8. Am I reading this right?

There are only 233k people with more than a million in their 401k? Or is that just the number of millennials?

If it’s the former then holy shit.

Dh’s parents paid for his undergrad degree. His employer paid for his masters degree. He bought our first home in the late 80s, when housing stock around here was $50-$75k. Our first mortgage was $400 a month. Those are undeniable advantages.

The first couple of years, his employer had a pension plan then switched to a 401k. In the 32 or so years since (yeah, he’s never had an interruption in employment and still works for the same company that paid for his masters), he’s contributed the maximum allowed to his 401k each year. Those contributions- (averaged because I know the $ has increased every year or so) add up to far, far less than the 401k balance. On a bad day, several years worth of contributions just vanish. On good weeks, several decades of contributions may be gained.

There were times when I really wanted the extra $15-$19k/ year of income. It wouldn’t have been worth it. Even when his income was $60k/year and our mortgage was $1500/mo.

I’m surprised millennials have hit the million mark. Given housing prices and wages, it’s amazing that they are able to do that.

[JenniferJuniper]

10. The oldest millennials are 40 now.

My 40 year old cousin bought a house right after the economic crash and is now sitting on a lot of equity.

[llmart]

11. I read it the same way you did.

If that's the case, people in general are not doing very good with their IRA's/401k's.

These sorts of articles leave so much out that they aren't really helpful. For all we know, some millennials may have come from wealthy families. Some may not have gone to college. Some may have inherited a grandparent's money. I can think of a lot of scenarios here. How many of the 233k millionaires are my age and older and have had 40+ years to save? Also, when you talk in averages, you are lumping in the very wealthy with all others bringing the average up and making it look like there are just average joes out here with a million or more dollars.

Finally, the stock market is up right now. The value of someone's 401k or IRA can fall dramatically in a year. I am not trying to discourage young people from saving, because I truly believe in it, but it's not always easy.

[Zorro]

16. The millennials aren't the 233k 401k millionaires

The discussion of millennials and their Roth IRA contributions is further down in the article.

But yeah if there's only 233k with >$1M in their 401k plans, it does not bode well for many facing retirement.

[Arthur_Frain]

12. What is omitted of course.

Is that this is all on paper. One market downturn and it’s all gone. The delay issue where there used to be weeks from the time you made a request to when they redeemed the funds is over because of online banking, but you still have to time the market. Which you can’t do.

Unless you got your million and got out, and put it........where? Real estate maybe? Who did this?

[Nature Man]

13. kinda like the dollar balance on a "win"

playing video poker.

Wall Street is a casino for the wealthy.

[Recursion]

17. That's true of Jeff Bezos's "fortune" too

That's the problem with getting too excited about a wealth tax

[DFW]

14. I I have both a 401k and a Roth IRA. They are completely separate.

I'll be 68 this year, but I sure don't have a million in my 401k! What kind of a job lets you amass that by age 40? I must be in the wrong line of work!

I made the conversion from a normal IRA to a Roth IRA in 2009, while I was still a Texas resident. Cheneybush had so depressed the stock market, I was sure it would come roaring back under Obama, so I paid all taxes due on the value of the IRA as it stood in 2009, and figured it could only go up. As I got the Roth IRA explained to me, you pay the taxes up front when you convert. Then, if your portfolio goes down in value, tough luck, but if it goes up in value, it's all yours. When you pay the taxes in full, as far as the government is concerned, you're done. With the Dow at 8000, I figured I was safe. When Obama left office, and it was 20,000, I turned out to be right, but now the Germans want 50% of what is left, even though the double taxation treaty says that a US resident (which I was when I converted) cannot be taxed on US income in Germany if US taxes were paid as a US resident (they were). The dispute continues. Heil Honecker.

Anyway, I am still working, so I am not taking money out of either fund yet. If I retire, I may be forced to leave Germany, as I cannot retire on 10% (40% tax paid to the USA when I converted, plus another 50% tax the Germans think they are entitled to now) of what I put away. My wife would freak out, but Switzerland or Holland are next door, and they beat busking in the subway corridors at age 70.

[not_the_one]

15. Is this implying that all these "rich millennials" are going to be

voting for the turd?



Bank account over country?