Grad students should save for retirement

[marshwiggle]

So, back to the student. Is there a point where they can start to look forward responsibly?

What if, even living frugally, there's no margin for saving, ever?

What are their options?

I heard a rant from a millenial or Gen Z a couple of weeks ago about how much harder they have it than boomers did. I thought back to my own situation.

Married after grad school. Only time I've ever owned a new car was during grad school. Two professional jobs in STEM fields. Lived in a rented 1 BR apartment. First kid had crib in the living room. At 30, bought a duplex with another couple; had family help with downpayment.

The point is, that's not a lot different from graduates today, especially if they're in similar fields. The big house I live in NOW is the result of 2 professional incomes for close to 40 years.

Question to the fora: Is my experience unusual? Do any of you (boomers) see yourself as having studied in similar fields to young people nowdays but having had a greatly easier time of it financially than they do? Or is the problem overstated?

[arcturus]

I heard a rant from a millenial or Gen Z a couple of weeks ago about how much harder they have it than boomers did. I thought back to my own situation.

Married after grad school. Only time I've ever owned a new car was during grad school. Two professional jobs in STEM fields. Lived in a rented 1 BR apartment. First kid had crib in the living room. At 30, bought a duplex with another couple; had family help with downpayment.

The point is, that's not a lot different from graduates today, especially if they're in similar fields. The big house I live in NOW is the result of 2 professional incomes for close to 40 years.

Question to the fora: Is my experience unusual? Do any of you (boomers) see yourself as having studied in similar fields to young people nowdays but having had a greatly easier time of it financially than they do? Or is the problem overstated?

Tne expectations are different. When I went to graduate school, I knew that I was (a) a student; (b) on my way to a professional career. Students now tend to think (a) they are a professional; (b) a student. They expect to live a middle-class life-style immediately, rather than working towards one.

As I said previously, I think our stipends are quite reasonable given the cost-of-living in this town. Nonetheless, we have had some of our students take out student-loans because they could not make ends meet. They were living alone in multiple-bedroom apartments in the most exclusive and posh of the housing complexes in town and eating out for almost all of their meals. Their spend rate could not be supported by most starting-faculty salaries in my field. In contrast, when I was a graduate student, I considered my available stipend and chose to live in a studio apartment/shared housing/an apartment in the outskirts of town. I cooked (most of) my own meals (much more fun when I shared housing, as we shared the cooking duties). In other words, I lived within my means.

I think there is a good discussion to be had regarding graduate student stipends. But that discussion also needs to include time-to-degree considerations. Living "a student life-style" for 5 years is much different than expecting future professionals to take a vow of poverty for ten (or more!!!) years. The latter is particularly egregious if it normally does not lead to the expected professional career.

So, in terms of the original topic: students should be encouraged to live within their means (and stipends should be sufficient such that this is not well below poverty level) and develop a habit of saving for retirement using financial vehicles (such as a Roth IRA) that still provide access to those funds in the case of emergency. Universities should provide opportunities for students to learn about financial planning (beyond "make a budget and stick to it") and, in general, increase financial literacy of their students.

[mamselle]

I've read there's a kind of telescoped combination of memory and experience that younger students experience if parents who developed their resources well after early penury downplay that difficult period (perhaps it's painful, perhaps it's something they don't want to admit to).

The kids, having always grown up in a decent setting, never saw the path it took to get there, and expect to start out with the kind of job it took their folks 20 years to land. The twin gospels of work ethic and conspicuous consumption, touted in ads and sales pitches, add pressure by suggesting that there's something wrong with them if they, too, fail to start out with a bang.

So, that part isn't helping, definitely; there's also been a conflation of two generations, it seems to me, into the term "boomer."

My folks were part of the actual 'boomer' generation, born in the 1920s and, surviving WWII, building a life that started in a tiny house that I remember from when I was 4, and led to a bigger one when I was 6; I still felt as if we were overreaching when they remodeled the kitchen and installed this huge freezer-refrigerator thing that took up all the space the old sink had before.

My sibs, just a couple years younger, each, didn't recall the earlier small start, and moved forward with more of what I think of as a 'go-getting' attitude; they say each child is raised in a different family, and I have always felt as if I were raised in the one that hadn't quite forgotten its roots as much as theirs had, or seemed to have done.

Now, people refer to my generation as 'boomers,' even though we're really a later generation; I don't know what we'd be called--maybe 'second-wave boomers'?--but that, too, seems to confuse things since some of the assumptions about the ease of reaching a more affluent lifestyle are also telescoped.

And I'm personally interested in this question because I'll probably never really be able to 'retire' fully; I've even worked for some of those economists but their erudition about finance apparently didn't rub off on me--or my earnings, again, didn't really permit me to do as much with it.

My folks did better on that score, as well; they had something to leave us when they died; my sibs and I agree we may not be in as good a spot as they ended up, not because of slothful ways or profligate spending, but because of the timing of the difficult circumstances that we've encountered, later in our lives, instead of earlier, as they did.

Just an n=1 (or 2, or 3) data point contribution, maybe.

M.   

ETA: Arcturus and I are saying the same thing about expectations, I think.

[marshwiggle]

I've read there's a kind of telescoped combination of memory and experience that younger students experience if parents who developed their resources well after early penury downplay that difficult period (perhaps it's painful, perhaps it's something they don't want to admit to).

The kids, having always grown up in a decent setting, never saw the path it took to get there, and expect to start out with the kind of job it took their folks 20 years to land. The twin gospels of work ethic and conspicuous consumption, touted in ads and sales pitches, add pressure by suggesting that there's something wrong with them if they, too, fail to start out with a bang.

So, that part isn't helping, definitely; there's also been a conflation of two generations, it seems to me, into the term "boomer."

.
.
.

ETA: Arcturus and I are saying the same thing about expectations, I think.

One more point:
When I started working, I didn't expect to get a promotion in the first 6 months, or be in the C-suite by 30 (if ever!). I didn't expect to "change the world"(TM); I expected to "pay the rent"(TM).

[glendower]

"Baby boomers" are the generation born in the 20 years after WWII, 1945-1964. It sounds like your parents, Mamselle, were "greatest generation," if they were born closer to the beginning of the 1920s. If born at the end of the decade, they're not quite in the "greatest" category, but I'm not sure what the sociologists would call them.

[mamselle]

Mmm, interesting.

I thought the "boomer" designation came from the post-WWII housing boom of returning GIs, etc., which would mean young men and their wives who had been in their 20s during the war.

But I'm recalling it from a very old "LIFE" magazine article in the 60s, so maybe I'm mis-remembering it.

Thanks for the disambiguation!

M.

[Kron3007]

So, back to the student. Is there a point where they can start to look forward responsibly?

What if, even living frugally, there's no margin for saving, ever?

What are their options?

I heard a rant from a millenial or Gen Z a couple of weeks ago about how much harder they have it than boomers did. I thought back to my own situation.

Married after grad school. Only time I've ever owned a new car was during grad school. Two professional jobs in STEM fields. Lived in a rented 1 BR apartment. First kid had crib in the living room. At 30, bought a duplex with another couple; had family help with downpayment.

The point is, that's not a lot different from graduates today, especially if they're in similar fields. The big house I live in NOW is the result of 2 professional incomes for close to 40 years.

Question to the fora: Is my experience unusual? Do any of you (boomers) see yourself as having studied in similar fields to young people nowdays but having had a greatly easier time of it financially than they do? Or is the problem overstated?

I think the numbers back their claims. 

My parent purchased their home for 40K, and it would now sell for close to $1 000 000.  This is a 25x increase in housing price, whereas income has not kept pace.  This isn't to say my parents had it easy, they worked very hard to buy this house, but what they did would likely be insufficient now.

Additionally, my parents did not complete university but were able to build a really good life.  I dont know that they would be able to do this in the current climate.  The "need" for a university degree to get entry level jobs puts people four years behind and usually in debt.  As with housing, the cost of university has increased quicker than incomes.

Personally, I am in between boomer and millenial, and have been priced out of the housing market in my area.  Saving a 50k down-payment to then service a 900k mortgage is out of reach for most people based on median family incomes, let alone doing this while saving for retirement (and workplace pensions are now rare).

[Kron3007]

Mmm, interesting.

I thought the "boomer" designation came from the post-WWII housing boom of returning GIs, etc., which would mean young men and their wives who had been in their 20s during the war.

But I'm recalling it from a very old "LIFE" magazine article in the 60s, so maybe I'm mis-remembering it.

Thanks for the disambiguation!

M.

The definition of boomer seems to have changed.  When I was in school, I was told it ended in the late 40s or early 50s.  Now it is usually extends much further.

[apl68]

My parents were born in 1943 and aren't technically "boomers."  They did nonetheless come of age in the 1960s, and seem not to have had much trouble getting started in life in their early 20s.  They were from that old-fashioned section of the working class with middle-class attitudes toward respectability, education, etc. whose children mostly passed into the middle class.  Mom and Dad never got past a fairly modest working class income status.  That was largely because of their deliberate decision to focus on service as a bi-vocational minister and minister's wife team, rather than on career advancement.  If they'd made money and status a priority, they could probably have gone a good deal farther.

I've achieved the same modest competency they have in terms of income.  But it took me a whole decade or so longer, due to being suckered into trying for a PhD while serving the university as exploitable grad student labor.  My brother also took longer, for broadly opposite reasons--he foolishly blew off his chance at getting a college education (full scholarship!), made some other bad choices, then straightened up in the Army, became a career NCO, and since retiring from the military has belatedly completed college and gone into IT.  Most school friends I know who didn't blow off school and crash and burn along the way also seem to have done okay in terms of making a stable living.

My nieces have all failed to complete college, and one now has a baby out of wedlock with an absolutely stereotypical worthless baby daddy.  The other two are unmarried and childless, and making a decent living.  It has taken them a long time to reach a point of being able to find a place to live on their own.  My sister-in-law's decision to blow up the family by leaving my brother to chase after another guy and taking the children with her while they were still children probably has more to do with their lack of success in life than anything else.  The unstable home life and the bad neighborhoods that their mother has had them living in go a long way toward explaining their lack of achievement.

So that's our family's history.  As for what I've seen more broadly--well, I'm as disappointed in the rising generation's life choices and work ethic as anybody--I've had the misfortune to have to try to employ some of them, and I've seldom seen it go well--but there's no question that they've had a very raw deal.  In 2008 we graduated the most poorly-prepared--in terms of maturity, work ethic, stable home examples, and realistic expectations--generation in our history, into the worst economic crisis since the Great Depression.  With levels of student debt that we of earlier generations just didn't have.  It costs more now to attend the lowest-ranked, open-enrollment state college than it did to go to a good SLAC when I was in school!  We've basically done everything conceivable to set the youth of today up to fail, and sure enough most of them are failing.  We "Gen-Xers" were notoriously pessimistic about our prospects growing up, and we had reason to be.  But overall we were so much better off than the youth of today.  As disappointed as I am in them, they are only what we of previous generations have made them or negligently allowed them to become.

[marshwiggle]

So, back to the student. Is there a point where they can start to look forward responsibly?

What if, even living frugally, there's no margin for saving, ever?

What are their options?

I heard a rant from a millenial or Gen Z a couple of weeks ago about how much harder they have it than boomers did. I thought back to my own situation.

Married after grad school. Only time I've ever owned a new car was during grad school. Two professional jobs in STEM fields. Lived in a rented 1 BR apartment. First kid had crib in the living room. At 30, bought a duplex with another couple; had family help with downpayment.

The point is, that's not a lot different from graduates today, especially if they're in similar fields. The big house I live in NOW is the result of 2 professional incomes for close to 40 years.

Question to the fora: Is my experience unusual? Do any of you (boomers) see yourself as having studied in similar fields to young people nowdays but having had a greatly easier time of it financially than they do? Or is the problem overstated?

I think the numbers back their claims. 

My parent purchased their home for 40K, and it would now sell for close to $1 000 000.  This is a 25x increase in housing price, whereas income has not kept pace.  This isn't to say my parents had it easy, they worked very hard to buy this house, but what they did would likely be insufficient now.

One confounding variable is how the size of homes has changed. (Also the expected amenities.) My parents (with 4 kids) lived in the 3 BR 900 sq. ft. home that they built. They had a single car (a VW Beetle), a black and white TV with an antenna and a party line phone. The duplex I mentioned earlier had 2 units of 1300 square feet each.

The average home in our neighbourhood now is probably about 2500 square feet, not counting any finished basement. I said years ago that if I were willing to have the standard of living of my parents, I could do so on a part-time job.

If many young people today were willing to accept the standard of living of their parents (among other things, no smartphones or internet, etc.) they could probably do so.

Now you have to buy a condo to get something as small as normal homes from 50 years ago. (It's no surprise that tiny homes are becoming a thing.) And average family sizes keeps decreasing as well, so the minimally "acceptable" standard of living for young people is vastly above what their parents had at their age.

[Kron3007]

My parents were born in 1943 and aren't technically "boomers."  They did nonetheless come of age in the 1960s, and seem not to have had much trouble getting started in life in their early 20s.  They were from that old-fashioned section of the working class with middle-class attitudes toward respectability, education, etc. whose children mostly passed into the middle class.  Mom and Dad never got past a fairly modest working class income status.  That was largely because of their deliberate decision to focus on service as a bi-vocational minister and minister's wife team, rather than on career advancement.  If they'd made money and status a priority, they could probably have gone a good deal farther.

I've achieved the same modest competency they have in terms of income.  But it took me a whole decade or so longer, due to being suckered into trying for a PhD while serving the university as exploitable grad student labor.  My brother also took longer, for broadly opposite reasons--he foolishly blew off his chance at getting a college education (full scholarship!), made some other bad choices, then straightened up in the Army, became a career NCO, and since retiring from the military has belatedly completed college and gone into IT.  Most school friends I know who didn't blow off school and crash and burn along the way also seem to have done okay in terms of making a stable living.

My nieces have all failed to complete college, and one now has a baby out of wedlock with an absolutely stereotypical worthless baby daddy.  The other two are unmarried and childless, and making a decent living.  It has taken them a long time to reach a point of being able to find a place to live on their own.  My sister-in-law's decision to blow up the family by leaving my brother to chase after another guy and taking the children with her while they were still children probably has more to do with their lack of success in life than anything else.  The unstable home life and the bad neighborhoods that their mother has had them living in go a long way toward explaining their lack of achievement.

So that's our family's history.  As for what I've seen more broadly--well, I'm as disappointed in the rising generation's life choices and work ethic as anybody--I've had the misfortune to have to try to employ some of them, and I've seldom seen it go well--but there's no question that they've had a very raw deal.  In 2008 we graduated the most poorly-prepared--in terms of maturity, work ethic, stable home examples, and realistic expectations--generation in our history, into the worst economic crisis since the Great Depression.  With levels of student debt that we of earlier generations just didn't have.  It costs more now to attend the lowest-ranked, open-enrollment state college than it did to go to a good SLAC when I was in school!  We've basically done everything conceivable to set the youth of today up to fail, and sure enough most of them are failing.  We "Gen-Xers" were notoriously pessimistic about our prospects growing up, and we had reason to be.  But overall we were so much better off than the youth of today.  As disappointed as I am in them, they are only what we of previous generations have made them or negligently allowed them to become.

My personal experience with grad students (millenials or later) has been quite different.  They have largely been hard working and responsible.  To me, the concept that they are lazy, etc., is just typical inter-generational stereotyping.  I'm sure my grandparents thought the same of my parents (came of age in the 60s-70s), and now it has simply been passed along. 

[Durchlässigkeitsbeiwert]

I heard a rant from a millenial or Gen Z a couple of weeks ago about how much harder they have it than boomers did. I thought back to my own situation.

Very senior [boomer] employee in the company I was starting in after finishing my PhD once started reminiscing about how broke he was just after grad school sometime in the early 1980s, when he was starting (in the same company actually). Apparently his boss had to give him several thousand dollars advance, to help him rent place etc.
- any employee asking for an advance for an entry-level position now will be laughed out of an interview. Actually, the amount he mentioned would represent quite noticeable portion of my starting salary (after accounting for inflation).
- one can't work in the same company for 30+ years anymore. Current HR thinking considers people not switching jobs every several years "lacking initiative" or even "lazy". They openly said to me that I need to have a competing offer to ask for anything.

Though, as Kron3007 mentioned, on a level above anecdotal,  housing prices (particularly, in places where many professional-level jobs are) are the main issue.

[marshwiggle]

I heard a rant from a millenial or Gen Z a couple of weeks ago about how much harder they have it than boomers did. I thought back to my own situation.

Very senior [boomer] employee in the company I was starting in after finishing my PhD once started reminiscing about how broke he was just after grad school sometime in the early 1980s, when he was starting (in the same company actually). Apparently his boss had to give him several thousand dollars advance, to help him rent place etc.
- any employee asking for an advance for an entry-level position now will be laughed out of an interview. Actually, the amount he mentioned would represent quite noticeable portion of my starting salary (after accounting for inflation).
- one can't work in the same company for 30+ years anymore. Current HR thinking considers people not switching jobs every several years "lacking initiative" or even "lazy". They openly said to me that I need to have a competing offer to ask for anything.

This is kind of the reverse perspective of what I've gotten from my Gen Z offspring. In tech, people are frequently changing jobs because they're always looking for greener pastures. They get high salaries to begin with, and there are always new startups that they can go to which may be the next Google.

TLDR; for many, job turnover is because they expect to rise through the ranks at a pace their parents would never have dreamed of.

[Kron3007]

I heard a rant from a millenial or Gen Z a couple of weeks ago about how much harder they have it than boomers did. I thought back to my own situation.

Very senior [boomer] employee in the company I was starting in after finishing my PhD once started reminiscing about how broke he was just after grad school sometime in the early 1980s, when he was starting (in the same company actually). Apparently his boss had to give him several thousand dollars advance, to help him rent place etc.
- any employee asking for an advance for an entry-level position now will be laughed out of an interview. Actually, the amount he mentioned would represent quite noticeable portion of my starting salary (after accounting for inflation).
- one can't work in the same company for 30+ years anymore. Current HR thinking considers people not switching jobs every several years "lacking initiative" or even "lazy". They openly said to me that I need to have a competing offer to ask for anything.

This is kind of the reverse perspective of what I've gotten from my Gen Z offspring. In tech, people are frequently changing jobs because they're always looking for greener pastures. They get high salaries to begin with, and there are always new startups that they can go to which may be the next Google.

TLDR; for many, job turnover is because they expect to rise through the ranks at a pace their parents would never have dreamed of.

To me it seems that this is more of a cultural shift caused by how companies treat employees.  If you stop offering pensions, benefits, and perminent positions (the so called gig economy), why would you expect employee loyalty?

[Puget]

Mmm, interesting.

I thought the "boomer" designation came from the post-WWII housing boom of returning GIs, etc., which would mean young men and their wives who had been in their 20s during the war.

But I'm recalling it from a very old "LIFE" magazine article in the 60s, so maybe I'm mis-remembering it.

Thanks for the disambiguation!

M.

No, it comes from "baby boomers", i.e., the children born to the generation you are describing.