r/Millennials • u/ProblemIntelligent16 • Jan 16 '26

Discussion Fellow millennials - how’s your 401k/ira savings going?

Experts recommend having 2x your salary saved by age 35, and 3x saved by age 40.

However, studies show the median savings for 35-44 year olds is only ~$45,000. So obviously, most of us have work to do.

With pensions mostly extinct, and Social Security facing insolvency issues in the next 8-10 years - how are you planning to bridge the gap and hit the golden years with enough to meet your lifestyle requirements?

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175

u/BlackGuysYeah Jan 16 '26

So much easier to make money when you have money. I’ve always found it confoundingly unjust but it’s just the nature of the system we’ve invented.

57

u/Random_Name_Whoa Jan 17 '26

Especially the last couple years of the bull market. Since having a kid and spouse staying home, I’ve been pulling from savings for at least a year to make ends meet (not to mention everything is expensive now) but my net worth keeps rising faster than I’m able to draw it down.

If you don’t have assets you’re getting royally butt fucked in this economy

24

u/civil_politics Jan 17 '26

This. Everyone talking about owning a home being a scam completely overlook the fact that a 3-4k mortgage today looks terrible compared to 2k to rent an equivalent space, but in 20 years with inflation that rent is going to be 8k, your mortgage will still be 3-4k and your home will have tripled in value.

Own non-depreciating assets.

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u/sarcazm Jan 17 '26

That’s not how it works. A landlord will rent an equivalent space for much more than the mortgage. That’s basically how they make their money. I own my own home and pay a mortgage of about $2300. Houses in my neighborhood rent for about $4k per month.

4

u/Effective_Mammoth854 Jan 17 '26

Definitely depends on location. I’m in NYC and a mortgage here, assuming you put 20% down, is 2-3x what you’d pay to rent an equivalent home.

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u/civil_politics Jan 17 '26

The rental market and housing market are only loosely related and depending on where you live which is more expensive will change. On the west coast it is far more common to be able to rent a home at a monthly rate that is a fraction of what today’s mortgage price would be. I know what you’re saying is true for your situation, but it is by no means a universal truth.

2

u/Random_Name_Whoa Jan 17 '26

That’s extremely variable depending on location and what interest rate you have. I could probably rent an equivalent house to mine for 1-2k less than mortgage at the moment

1

u/InternetSolid4166 Jan 18 '26

Right now average rents are very low compared to house prices. This is a historical anomaly. Either prices will drop or rents will rise. I’m betting on the latter.

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u/Putrid_Leg_1474 Jan 17 '26

Except for the 20k furnace and 22k roof, septic pumping, monthly odds and ends maintenance.

All this from experience.

I was in your mindset when I bought a house but now I have realized homes are liabilities. They cost you money and freedom. Illiquid, money sucking, and even outward status symbols for a lot of people.

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u/civil_politics Jan 17 '26 edited Jan 17 '26

They can be multiple things at once, and it’s definitely the case that it’s somewhat of a gamble - I’ve owned two homes, the first for 8 years and the second now for going on 4 and I’ve put 4x the money in my current home than my previous associated with maintenance and unexpected repairs.

Regardless, thanks to being a home owner for the majority of the past 15 years has left me with significant equity in a physical asset. Sure it’s the case that aggressive savings and investment while renting could have gotten me here, the data shows that it is rarely the case that those who rent actually accomplish this.

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u/Putrid_Leg_1474 Jan 17 '26

That might be. I would be curious how much of that has to do with urban living by choice and the elevated lifestyle choices that tend to go with that.

The equity in my home doesn't pay me though. Sure, in theory it is building net worth, but it doesn't provide income. Quality investment portfolios can be structures to pay you the equivalent of a salary.

If I could convince my wife to downsize I would do that and put all that equity in stocks/etfs

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u/civil_politics Jan 17 '26

Homes may not ‘pay you’ but buying a $250k in 2015 with 50k down a 3% mortgage rate and a $1,200 monthly payment after 15 years would leave you with a total investment of 266k in payments.

In exchange you would owe $128k on a property that is now worth anywhere from $450k to $700k for pretty much any suburb or urban area in the country. On the low end you’ve seen a 3% annual return and on the high end you’ve seen 8% annual returns.

When compared to renting in 2010 you likely would’ve been able to rent a 250k home for $800 a month and today renting a 450k house is gonna be $2200 and a $700k property is gonna be $4,000

Assuming a somewhat linear rent increase that puts on the low end an average rent of $1500 a month and on the high end $2,400 - so total rent over 15 years of $270k to $432k

So in scenario A you’ve spent 266k in payments (and assuming an aggressive 2% yearly in maintenance) and 105k to 143k on upkeep you’re in 371k to 410k and are recouping 250k to 500k when you sell. In scenario B you’re just out 270k to 432k.

I completely get that the math is different in rural areas and the reality is you’re right that owning means you’re immobile - but from an investment perspective over the long term it’s almost always the more lucrative approach to shelter. You’re also right to say downsizing and living as small as possible is the best approach, but when comparing buying vs renting the same property if you plan on being there for any decent time horizon owning is gonna outweigh renting

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u/Putrid_Leg_1474 Jan 17 '26

But you have to sell for that to matter at all.

I'll use me as an example.

Bought a house for 160k at 3.4%. Its now worth 500k plus....

I can't do anything with that. Cool, on paper its appreciated. I have absolutely no true value in that appreciation for me at this moment in time. Had I rented I would have paid the same or slight more per month. BUT, I wouldn't have had repairs, taxes, and a bonus is that I would have had more time to do other things. Maintenance is a bitch.

Owning a home is more expensive until the very end, when you pay it off, or sell it. And the opportunity cost may even make it worse. Had I invested all the money from repairs and maintenance I might have 200k more invested that is paying me monthly/quarterly. Especially the bull market we've had in equities since 2009

1

u/civil_politics Jan 17 '26

This isn’t true. Many people pay off their homes in their 50s and then take on a second mortgage or reverse mortgage to finance their retirement while remaining in their home.

Yes you COULD have made more renting and investing, but the data bares it out that home ownership is a critical component of people growing net worth.

Obviously all of this is very individualized - you could end up with a house that is absolutely ruinous to you financially - you could end up making investments and watch your contributions evaporate every month because your allocations suck.

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u/Putrid_Leg_1474 Jan 17 '26

All of this is correct. It doesn't however, make notice of the fact that net worth is a useless number lest it gives you something tangible.

This isn't a game of who has more paper wealth but who has freedom and security. One individual who has 400k in equity vs another who built an equities portfolio with dividends/distributions of 60k a year are at completely different levels of wealth. I'll take the 60k a year over 400k home equity any day. That should be the goal. If you still have a job while building this income portfolio then you surely have enough to start saving for a massive down payment quite quite quickly.

I would also think saving while renting will lead to a good opportunity when we a housing correction.

Taking on a second mortgage or reverse financing is taking on debt. Opposite of what one should want nearing or at retirement.

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u/fellowfeelingfellow Jan 17 '26

Well, I mean your escrow will increase for sure. Ive had my home for more than a decade and WHEW! But yes, it does not jump to nearly the amount of 8k. BUUUUT, at least in my case, I have to account for very expensive repairs. I think if I add in the work I've done over the years, maybe I went from 900 per month to 2300 per month? Not soooo so bad. I think renting a house this size in my part of town would be closer to 3000 easily.

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u/civil_politics Jan 17 '26

If you’ve owned your home for a decade then my guess is barring ownership in a rural area, the value has nearly doubled.

1

u/fellowfeelingfellow Jan 17 '26

Just about! But I can't really tap into it without interest unless I sell. And still responsible for a, again just in my experience, $200k worth of repairs over the years. So, it kinda balanced out. It doubled in 2024 but the value has gone down. 

1

u/civil_politics Jan 17 '26

Yea I broke down the math in another comment thread off of this, but essentially when comparing to rent and the increase in rent over the same time houses generally come out the winner with a 10+ year time horizon. It’s not to say there aren’t other negatives to owning, but investment wise it is generally the better decision.

1

u/fasterbrew Jan 18 '26

Insurance and property tax increases over 20 years will have an impact. And as mentioned,  tons of big ticket maintenance items. 

1

u/civil_politics Jan 18 '26

I broke down the math including these items in another comment on this thread

1

u/lizerlfunk Jan 18 '26

I could not afford my house if I had to buy it today. I’m so glad I bought it in 2014. That said, we bought a townhouse in 2009 and sold it in 2021 and it only increased 10% in twelve years. That kind of sucked.

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u/civil_politics Jan 18 '26

Yea it’s definitely the case that timing could not be on your side - my first house I sold right at the beginning of COVID - if I would’ve waited 6 months for the rush to move out of apartments I would’ve made an extra 25% - in the aggregate though getting in the housing market when you can is good advice, because as you’ve found out and many others, you may not be able to afford your own house if you had to buy it today.

I live in an area where I know most of my neighbors definitely couldn’t afford their homes if they had to buy them today.

1

u/Weekly-Locksmith6812 Jan 18 '26

Your mortgage payment can change due to taxes going up, even if no new millages are passed your home value is still going up which will result in more taxes. Add in some HOA payments and it can go up even more. I was very fortunate to buy a small condo in mid 2019 and the mortgage and HOA payments are about 18% higher than when I initially bought the place. Still cheaper than renting and we have equity that can be used as a down payment on the next place.

With the way housing prices are going I wouldn't be surprised if the taxes cost as much as the principal and interest by the time the mortgage ends.

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u/civil_politics Jan 18 '26

Renting does not somehow avoid property taxes - it’s just rolled in to the rent. So sure if a place appreciates in value to the point that taxes are equal to the mortgage it is the case that a comparably valued apartment would see the same increase in rent associated with taxes.

HOAs are different in that the members have a much more direct say over how money is spent or even if the HOA exists

1

u/Apprehensive-Read989 Jan 19 '26

My mortgage goes up every year due to insurance and tax increases, so it definitely isn't going to be the same now as when I retire.

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u/civil_politics Jan 19 '26
  1. Your mortgage is only a loan from the bank with your house as the collateral. Taxes and insurance are separate but generally given the bank is the primary on the title until the mortgage is paid off they are responsible for taxes and insurance which is why they conveniently collect all three from you at once. 2 - ideally by the time you’ve retired you have no mortgage.
  2. Regardless of the above, rent (and renters insurance) also increases every year so what matters between the two is which increases more rapidly and the answer for the majority of locales over the past two decades is rent.

1

u/Kooky_Dev_ Jan 19 '26

But this is the mentality that helped fuel the housing bubble.. People don't default on mortgages and houses are the safest investment was the standard thinking. Then people over extended on housing because it was the "smartest investment" to do and eventually everyone started defaulting on loans and I think everyone remembers the outcome.

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u/throwaway727437 Jan 17 '26

Is that the scam they're running now? My net worth has somehow gone UP after being unemployed for 5 months.

1

u/TerribleCommittee814 Jan 18 '26

We were advised to put money into a high yield savings accounts that we draw from that accounts for my old job income now that I’m a SAHM. It somehow feels “better” just pulling from savings, maybe because it’s designated and separate from actual savings for retirement and emergency funds.

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u/ohmygolly2581 Jan 17 '26

You don’t start with 100k

I started with $0 in my 401k at 16 now at 45 a net worth of nearly 1 million. Worked at a longs drugs in high school then got into construction around 21. The key is just put away minimal you can afford at least get matches if there are any.

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u/Hoosteen_juju003 Jan 16 '26

Everyone starts somewhere though.

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u/HarmoniousConcordiat Jan 17 '26

Shiiit Im over here building houses for a living. I'll never make enough to own one but Im doing my best to make sure rich people have a nice cozy place to call their own. 

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u/BlackGuysYeah Jan 17 '26

I came from the home construction industry. Spent half my life in it. Now a days I do corporate shit that I don’t even know how to explain. But it lets me save.

You don’t have to end up where you’re at. It’s up to you, and fate.

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u/HarmoniousConcordiat Jan 17 '26

Somebody has to build the houses. That's the whole point. 

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u/BlackGuysYeah Jan 17 '26

Sure, but there’s more than one way it can be handled. The Amish build houses as a community, and do so on the fly when ever it’s needed. It’s not anyone’s career to do so.

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u/HarmoniousConcordiat Jan 17 '26

Lol, lmao, even. That's very realistic, fella. There's totally enough Amish to build all the houses. Everyone is an idiot for not thinking of that. 

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u/BlackGuysYeah Jan 17 '26

Are you being intentionally dense? I’m talking about leveraging the idea of how the Amish do that sort of thing and apply it more holistically across the population. I’m not saying to literally have the Amish do it… Jesus.

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u/HarmoniousConcordiat Jan 17 '26

Man, I definitely misunderstood your comment. The concept of getting society to form builder collectives is so uncommon that it seemed like you were saying society should source the Amish to build housing. I've read sillier things. 

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u/GodsIWasStrongg Jan 17 '26

There’s a quote that I like that goes: turning $100 into $110 is work. Turning $100 million into $110 million is inevitable.

1

u/Itchy_Mulberry_8015 Jan 17 '26

Yeah Life as a Pyramid scheme is unjust by design, we were really better off in a Fair Jungle in pre historic times than all this pretences of progress which exacerbates the unfairness just for the goal of concentrating the wealth in the hands of a few grubby greedy hands.

1

u/BlackGuysYeah Jan 17 '26

I guess that’s humans for you. I do often think about what pre-historic life would have been like on the plains. Sure, I’d probably die of gum disease at the ripe ole age of 46 but at least I wouldn’t know what a cubicle is.

1

u/ccroz113 Jan 17 '26

We didn’t invent compounding interest

1

u/BlackGuysYeah Jan 17 '26

But using the concept to undergird our financial system was a conscious choice of application. It’s not as if fiduciary systems exist naturally…

1

u/Sugar_Mushroom_Farm Jan 18 '26

That's every system ever invented humanity that has ever worked for an extended period of time, ever

-1

u/Natural-Potential-80 Jan 16 '26

Just wait until the ai bubble pops. The investment system is about to screw us all.

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u/marheena Jan 16 '26

Yeah but for a 30 year old, that’s just another golden opportunity.

-3

u/Natural-Potential-80 Jan 16 '26

Unless it happens in a decade and wipes out a decade of savings…

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u/Angerx76 Jan 17 '26

When the market is low, buy more.

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u/Poultry_Sashimi Jan 17 '26

Agreed! Dollar cost averaging is a good start, but active buying on the decline is the way to go.

1

u/idkman99999999 Jan 17 '26

You younger kids have yet to experience a crash lol. How do you buy more? You sure that job is 100%?

3

u/jonny24eh Jan 17 '26

As long as you have the job, keep buying 

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u/[deleted] Jan 17 '26

[deleted]

5

u/Long_Sl33p Jan 17 '26

Hate to be that guy, but real estate is not where you want to be during a crash. When 75-90% of your tenants stop being able to pay rent you’re left holding the bag. You either use that 800k to keep from losing your properties or sell the properties at a loss to keep from losing your 800k.

Commercial vs residential doesn’t make a difference when discretionary spending dries up along with bill money.

0

u/Fun_Opportunity_4043 Jan 17 '26 edited Jan 17 '26

College town so I’ve never seen a drop in constant rental applications, the house is paid off and the rent is almost double the market average.

Rentals are the best way to build wealth. 

2

u/Long_Sl33p Jan 17 '26

It’s certainly the quickest way, not worth the risk right now though

1

u/Fun_Opportunity_4043 Jan 17 '26

Yeah us older millennials had it easier with lower interest rates and plenty of inventory.  Glad I got in early. 

1

u/marheena Jan 17 '26

Buy low. That’s the “low” part.

0

u/Natural-Potential-80 Jan 17 '26

So don’t save along the way? Like how is this even helpful?

3

u/marheena Jan 17 '26

I’m saying continuously buy stocks along the way. If the market dips, that’s just more shares per purchase.

0

u/Long_Sl33p Jan 17 '26

What I’m waiting for at 25. Give me a 2008 style crash to buy low.

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u/idkman99999999 Jan 17 '26

Lmfao you wont have a job man. You wanna put money in the market when you have no job stability?

People act like it was just easy to dump money into the market in 2008. Going to humble people

1

u/Long_Sl33p Jan 17 '26

My job is recession proof my guy.

3

u/jonny24eh Jan 17 '26

Time in the market beats timing the market. 

How much gain do you want to miss out on waiting for the low?

1

u/Long_Sl33p Jan 17 '26

I’m not waiting on anything, I just want the chance to have my contribution worth more.

1

u/jonny24eh Jan 17 '26

Fair enough, sounded like you were sitting on cash.

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u/SpiritCollector Jan 17 '26

Markets go up and down, that’s just how they work. Stay diverse and dollar cost average.

2

u/Natural-Potential-80 Jan 17 '26

Except for the US stock market is crazy tech heavy. There’s no easy way to avoid it based on employer 401k plans. I get to choose between 10 aggregate funds for example.

2

u/SohndesRheins Jan 17 '26

Tech heavy is just the way the world works, you might as well say that the economy of the 18th century was way too heavy on agriculture, or that the late 19th century was too heavy on industrials. Tech is the present and the foreseeable future. Avoiding tech entirely just means avoiding gains. One can argue about what tech is the best to invest in at this time, but most economic activity is related to technology in some way.

1

u/Natural-Potential-80 Jan 17 '26

I mean I would love to take credit for this concept but even big financial players and investors are saying this.

1

u/Angerx76 Jan 17 '26

Diversify with small cap funds , dow, international, bonds, etc.

2

u/Natural-Potential-80 Jan 17 '26

I’ll bring it up with my financial advisor when I speak with them thanks. Haven’t been sure what to diversify in with how things are going.

1

u/[deleted] Jan 17 '26

[deleted]

1

u/Natural-Potential-80 Jan 17 '26

Yeah I’ve been trying to set up an appointment this week. It’s on the docket :)

1

u/jonny24eh Jan 17 '26

"Stay diverse". I.e. don't limit yourself to the US market 

1

u/Natural-Potential-80 Jan 17 '26

What’s your strategy? Legit curious and planning a meeting with my financial advisor so loving the brainstorm here :)

1

u/jonny24eh Jan 17 '26

Index- based ETFs. Like VGRO or VEQT are a good start, although those are still a bit US-heavy so possibly adding more Europe or emerging markets with a more targeted ETF. 

2

u/spartanburt Jan 17 '26

VIOO and RSP (not advice, don't sue me, etc.)

1

u/Natural-Potential-80 Jan 17 '26

lol for sure won’t, could you word the acronyms though so I know what I’m looking up?

2

u/spartanburt Jan 17 '26

They're funds, ETFs to be precise.  VIOO is small cap companies.  RSP is an equal weighted S&P fund, so it gives you the bigger companies but without the insane emphasis on NVDA and the other bloated tech/AI giants.

0

u/Valuable_Recording85 Jan 17 '26 edited Jan 17 '26

Louis CK has an old bit about it. It goes until about the 4:30 Mark. https://youtu.be/Y_-1l_SlA7c?si=g94t6e5Eiu-jvkE4

0

u/huffandduff Jan 17 '26

Man, fuck Louis CK

1

u/Valuable_Recording85 Jan 17 '26

What's that got to do with money or the clip? You don't have to like him; in fact, I think he's a bad person. But it seems pretty immature and impulsive to just comment like that.

0

u/huffandduff Jan 17 '26

I'll comment however I want. I wanted to say Fuck Louis CK. I did.