News:

Welcome to the new (and now only) Fora!

Main Menu

Grad students should save for retirement

Started by pgher, August 29, 2021, 05:50:19 PM

Previous topic - Next topic

dismalist

Well, turns out that there are systematic facts. Here is a study from the BLS that compares inflation rates from 2014 to 2017 across ages of householders

https://unece.org/fileadmin/DAM/stats/documents/ece/ces/ge.22/2018/United_States.pdf See Table 11.

If anything, younger households experienced slightly lower inflation on average. Variation within ages is high.
That's not even wrong!
--Wolfgang Pauli

Hibush

When I was in grad school, inflation was considerable >10% per year. Stipends were not keeping uyp.

These are the current equivalents of the cost back then, based on the grad-student stipend now vs then at the same school.
Rent (⅓ apartment): $1200
Gasoline: $14/gal
Milk: $28/gal
Used pickup truck (manual, 4 cyl): $32,000
Coast-to-coast airfare to parents: $3,200

Current grad students see their stipend go much further since actual prices are quite a bit less.

Caracal

Quote from: Hibush on September 05, 2021, 05:45:31 PM


Current grad students see their stipend go much further since actual prices are quite a bit less.

In my field, the actual stipends have gone up quite a lot. When I was admitted, the differences between similar programs was often very large. My impression is that these have narrowed because schools who were giving students less realized they were losing prospective students to the schools that paid better. This also was during the late 2000s recession and some places responded by admitting fewer students which freed up the money for higher stipends.

Kron3007

Quote from: Caracal on September 07, 2021, 06:14:18 AM
Quote from: Hibush on September 05, 2021, 05:45:31 PM


Current grad students see their stipend go much further since actual prices are quite a bit less.

In my field, the actual stipends have gone up quite a lot. When I was admitted, the differences between similar programs was often very large. My impression is that these have narrowed because schools who were giving students less realized they were losing prospective students to the schools that paid better. This also was during the late 2000s recession and some places responded by admitting fewer students which freed up the money for higher stipends.

The minimum stipend in my department is the same as when I did my MSc here about 15 years ago.  When I did my MSc, they had not changed for a long time prior, so it has been static for probably at least 20 years and likely more.  During the same period, housing/rent has shot up drastically, gas is more expensive, food has gone up, etc.  At the end of the day, they are poorer than I was, and I was quite poor.

Most faculty in my department pay more than the minimum stipend, but that is not universal and causes even more issues around inequity. 

Back to the original post, I dont think the grad students in my department could (or should) save anything for retirement.   When I started a PhD in a very low COL area where I also happened to get a larger stipend, I likely could have saved some money but ended up dropping that program.  SO, I guess some grad students could save, but it is really variable.


mamselle

Perhaps the point is to refer to it as an aspirational goal, from time to time, for the segment of one's life after a program is completed, with off-hand remarks like, "Of course, if you already have started, that's even better, but at least be aware of the potential once you have a stable, more sizeable income; I realize it might not be possible now."

Except that comes across as parental, telling-them-what-to-do remarks, so there may really be no place for it.

If one teaches something like accounting or financial planning, there are inbuilt opportunities to mention it, of course.

But I doubt if I'd turn around in the middle of a medieval arts lecture, between deconstructing the use of dragon imagery and the use of the knight-and-snail narrative in marginalia, and start talking about IRAs.

Of course, it might wake up some of them, and make them wonder what they'd missed.

M.
Forsake the foolish, and live; and go in the way of understanding.

Reprove not a scorner, lest they hate thee: rebuke the wise, and they will love thee.

Give instruction to the wise, and they will be yet wiser: teach the just, and they will increase in learning.

Frank McG

When I was a grad student, I found I was able to treat my stipend as non-income and therefore did not have to pay social security tax on it. But when somewhat later in my career I ended up at a state university with a pension system in lieu of social security, I am subject to the Windfall Elimination Provision in the calculation of my social security benefits from the part of my career I spent in industry. The way this works is that when SS calculates your benefits, they calculate your average monthly income over the top 35 years. If you receive a pension that was offered in lieu of social security, then at full retirement age, SS reduces your benefits by $500/mo if you have less than 20 years of substantial ss earnings. That would actually be $1000/mo if you defer ss to age 70 and have a spouse receiving spousal benefits. But this ramps down to no reduction if you have 30 years of substantial earnings. I sure wish I had paid a few hundred into social security for those 4-5 years of grad school. That would have translated to a few hundred dollars per month for life now. 

Caracal

Quote from: Frank McG on November 02, 2021, 10:46:28 AM
When I was a grad student, I found I was able to treat my stipend as non-income and therefore did not have to pay social security tax on it. But when somewhat later in my career I ended up at a state university with a pension system in lieu of social security, I am subject to the Windfall Elimination Provision in the calculation of my social security benefits from the part of my career I spent in industry. The way this works is that when SS calculates your benefits, they calculate your average monthly income over the top 35 years. If you receive a pension that was offered in lieu of social security, then at full retirement age, SS reduces your benefits by $500/mo if you have less than 20 years of substantial ss earnings. That would actually be $1000/mo if you defer ss to age 70 and have a spouse receiving spousal benefits. But this ramps down to no reduction if you have 30 years of substantial earnings. I sure wish I had paid a few hundred into social security for those 4-5 years of grad school. That would have translated to a few hundred dollars per month for life now.

I guess the question is whether it would have made sense to put 2000 bucks or so into social security in grad school to get an extra 2000-3000 a year after age 70. I'm not sure the answer is as clear cut as you think. Your current self thinks your grad school self was short sighted, but I'm not sure your current self isn't try to grab money you may not need from your penniless grad student past self.

Obviously I don't know anything about your financial situation, but it sounds like you are in line to receive a pretty good amount of money from your pension at retirement along with whatever other kind of retirement savings you have. In that context an extra 200-300 bucks a month might be a pretty small percentage increase. The extra money might have made more of a difference for grad student past you than future retired you.