Average Retirement Savings

I was recently reading a study I found on Vanguard where the average amount saved for retirement by age was noted. Granted this study was from 2014, but I still thought it was relatively shocking just how low the numbers were for my Millennial generation, which are individuals born between 1982-2004 and also referred to a “Gen Y” or “Generation Y”. In fact, I sadly think the numbers are very low for all age ranges and generations. This report goes to show that people are simply not saving much for retirement.

I want to bring this back to my Millennial generation and our lack of saving for retirement. I’ve read in other publications that my Millennial generation is known to be savers, much more so than Generation X or Baby Boomers. But this study from Vanguard disputes that on the surface and is based on empirical research, as this study is based on employer retirement plans (and their participants) managed by Vanguard, and amounts reflect the average balance per account. I say on the “surface” because my Millennial generation hasn’t had much time for compound interest to work in our favor like generations 10, 20, 30 years older than us. But these numbers are still very low for Millennials.

Let’s examine the below numbers more closely from a Millennials standpoint. As stated earlier, a Millennial is one who is born between 1982-2004, meaning in the year 2014 when this study by Vanguard was conducted, a Millennial ranged in age from 32-10. Based on this study we’re only examining a small portion of Millennials, those between the ages of 25-32 in 2014. Either way you slice it, the numbers stated below for those age 34 and below are rather low.

Average Retirement Savings by Age

Average retirement savings by age
Source: Vanguard, How America Saves 2014. This study examined employer retirement plans (and their participants) managed by Vanguard. Amounts reflect the average balance per account.

This chart shows average retirement plan account balances by age as of 2014.

  • For people under age 25, the average account balance was $3,865.
  • For people age 25 to age 34, the average account balance was $21,524.
  • For people age 35 to age 44, the average account balance was $54,054.
  • For people age 45 to age 54, the average account balance was $103,269.
  • For people age 55 to age 64, the average account balance was $154,421.
  • For people age 65 and over, the average account balance was $176,696.

Average Retirement Balance for a Millennial?

Millennials, how does your current retirement balance compare to the aforementioned “average” retirement balances Vanguard is reporting on?


The Success Principles of Jack Canfield


In late 2015 I began this very personal finance blog. It is my outlet for reading and researching on all things personal finance. One of my goals in 2016 was to read more. Read more books (non-fiction), scholarly pieces, magazine articles, and blog posts. My goal was to dramatically expand my knowledge in all things related to money, investing, business, self-improvement, and personal development.

I’ve always enjoyed reading business books to help me succeed professionally. Last year is when I really focused on succeeding financially. I’ve read a number of finance books, as well as biographies on successful investors like Warren Buffet and Jack Bogle. The one common theme from these successful people was their continued research and thirst for knowledge. They were always seeking self-improvement, which in turn brought greater wealth (personally, professionally, and financially).

Never Stop Learning

I always thought “self-help” books weren’t for me but they are unbelievably valuable. One of the latest books I just completed was The Success Principles by Jack Canfield (famed co-creator of Chicken Soup for the Soul).

The Fundamentals of Success

1. Take 100% Responsibility for Your Life
2. Be Clear Why You’re Here
3. Decide What You Want
4. Believe It’s Possible
5. Believe in Yourself
6. Use the Law of Attraction
7. Unleash the Power of Goal-Setting
8. Chunk It Down
9. Success Leaves Clues
10. Release the Brakes
11. See What You Want, Get What You See
12. Act As If
13. Take Action
14. Just Lean Into It
15. Experience Your Fear and Take Action Anyway
16. Be Willing to Pay the Price
17. Ask! Ask! Ask!
18. Reject Rejection
19. Use Feedback to Your Advantage
20. Commit to Constant and Never-Ending Improvement
21. Keep Score for Success
22. Practice Persistence
23. Practice the Rule of 5
24. Exceed Expectations

Transform Yourself for Success

25. Drop Out of the “Ain’t It Awful” Club…and Surround Yourself with Successful People
26. Acknowledge Your Positive Past
27. Keep Your Eye on the Prize
28. Clean Up Your Messes and Your Incompletes
29. Complete the Past to Embrace the Future
30. Face What Isn’t Working
31. Embrace Change
32. Transform Your Inner Critic into an Inner Coach
33. Transcend Your Limiting Beliefs
34. Develop Four New Success Habits a Year
35. 99% Is a Bitch; 100% Is a Breeze
36. Learn More to Earn More
37. Stay Motivated with the Masters
38. Fuel Your Success with Passion and Enthusiasm

Build Your Success Team

39. Stay Focused on Your Core Genius
40. Redefine Time
41. Build a Powerful Support Team and Delegate to Them
42. Just Say No!
43. Become a Leader Worth Following
44. Create a Network of Mentors and Others Who Will Up-Level You
45. Hire a Personal Coach
46. Mastermind Your Way to Success
47. Inquire Within

Create Successful Relationships

48. Be Hear Now
49. Have a Heart Talk
50. Tell the Truth Faster
51. Speak with Impeccability
52. When in Doubt, Check It Out
53. Practice Uncommon Appreciation
54. Keep Your Agreements
55. Be a Class Act

Success and Money

56. Develop a Positive Money Consciousness
57. You Get What You Focus On
58. Pay Yourself First
59. Master the Spending Game
60. To Spend More, First Make More
61. Give More to Get More
62. Find a Way to Serve

Success in the Digital Age

63. Master the Technology You Need
64. Brand Yourself with an Online Persona
65. Use Social Media in a Way That Enhances Your

Reputation

66. Use the Exponential Power of Crowdfunding
67. Connect with People Who Can Expand Your Vision

Final Thoughts on The Success Principles

I consider this book a must-read for all Millennials who want to succeed in life and business. It’s a great tool for helping you advance your life and career, emotionally and financially. The Success Principles gives you the basic strategies for success plus the advanced strategies that will help you become a success master. The principles are simple.


Average Wealth Management Fees


A number of Millennial’s may be thinking that they don’t have nearly enough money to consider a financial advisor. I’m here to tell you that most financial advisors are actively seeking new Millennial clients. We Millennial’s are the up-and-coming generation and the future of their industry.

While Baby Boomers and Generation X’ers obviously have more wealth accumulated than us currently, obviously because of time and compound interest, we are the future of wealth management advisory services. I have read countless articles recently about how financial advisory firms and certified financial planners are looking for younger clients. They want successful Millennial’s who may not have the assets as of right now but appear to be well on their way in the next decade or two plus. If a financial advisor can get you in under their management in your late 20’s or early 30’s, they know long-term you are a great client for them as your portfolio and investable assets continue to grow (as well as your personal income).

I personally think a Millennial is better off managing their money. I have no formal financial education but I read, listen and research investing, personal finance and money topics virtually every day. I want to successfully manage my money on my own and there are a number of mediums out there to do just that. I would encourage all Millennial’s to do their own wealth management and forego any financial advisory fees. It’s all very possible. I manage my own portfolio and I am beating the market.

With that said, there are some people who just like to be hands-off when it comes to their money. They would prefer to have someone else managing their money for them so they don’t have to. Behaviorally speaking from a financial standpoint, a financial advisor makes sense in that respect because they prevent you from during something drastic during a downturn. They help you stay the course (at least they should!).

Below are average fees a Millennial can expect to pay for the services of a financial advisor and/or wealth management firm. Using a “fee only” firm would be your best option.

Less than $500,000 in investable assets

Most of us Millennial’s will fall into this group as a starting point, in terms of overall investable assets. If you have less than $500k in investable assets, you should expect to pay approximately 1.25% in annual fees. For example, if you have a portfolio worth $400,000 and pay 1.25% in management fees, that would equate to $5,000 annually. Decent chuck, huh?

Less than $1,000,000 in investable assets

If you are closer to one million dollars in your portfolio then you can expect your fees to drop slightly – to the tune of 1.0% flat. So about 25 basis points less than if you have under $500k. For example, if you have a portfolio worth $800,000 and pay 1.0% in management fees, that would equate to $8,000 annually.

Between $1-5 million in investable assets

Once you hit the one million dollar plus mark is when you start to see a sizable savings in your wealth management fees. At this stage is when I personally would begin entertaining such a service from a financial advisor, because the fees are low enough that it may make sense for a Millennial. The average management fees for a portfolio ranging in value from $1-5 million is 0.75%. For example, if you have a portfolio worth $2 million and pay 0.75% in management fees, that would equate to $15,000 annually. $4 million would obviously equate to $30,000.

Over $5 million in investable assets

Now is when you really start to see the savings with a lesser management fee average of approximately 0.50% when your investable assets is above $5 million dollar. At this stage you should strongly consider having your assets under management if your porfolio is this large. For most of us Millennial’s this won’t be until we’re really closer to retirement, like in our 50’s or 60’s, if ever. It would without a doubt be a good problem to have…possessing a portfolio of more than $5 million dollars. Your management fees of 0.50% would equate to $25,000 annually.

Vanguard charges a flat 0.30% on all portfolio sizes

I have all of my investable assets saved with Vanguard and I love them. Great website, amazingly low-cost funds, and terrific customer support. On top of all of that, Vanguard only charges 0.30% for your assets under management. For example, with a $250,000 investment, the low cost of Vanguard’s advice service is only $750 annually compared with the industry average of $2,550 (1.02%). That means you’d keep $1,800 more annually invested toward reaching your goals. And there’s no fee for leaving the service.

Robo-advisor fees

Robo-advisors are all the rage now. And they are especially going after the entry-level, tech-savvy, Millennial investor. Its actually a very smart plan on their part. But what does a robo-advisor cost? They come in very low actually, ranging from 0.15-0.35%. The obvious drawback to a robo-advisor is the lack of human intervention, from yourself or a financial advisor. The benefit to using a robo-adviosor? The fact there is no human intervention. You take emotional decisions off the table completely, which is very important when investing (and staying the course) for the long-term.

10 Business Commandments from Guy Kawasaki

One of the first true business/money/finance books I ever read was Guy Kawasaki’s Rich Dad Poor Dad: What The Rich Teach Their Kids About Money – That The Poor And Middle Class Do Not! The book was first published by Guy Kawasaki in 1997 and became an instant hit. It took me nearly 10 years later to finally read the book.

Guy Kawasaki has a great life story to tell and his book is a great read. I would definitely recommend it to all Millennial’s. I really respect his views on business, entrepreneurship, and money. I’m not the biggest fan of his retirement and investment advice (as he is anti 401(k)’s which I think is ludicrous). He is more of a proponent of cash and real estate investing. With all that said, he is a very intelligent guy that is always worth reading and following.

I was recently listening to one of my favorite podcast, The Motley Fool Real Breaker Investing, and Guy Kawasaki was a guest on the show. Kawasaki was on the show to discuss his 10 “Business” Commandments. I actually had never heard these before so I wanted to share on my blog for all my Millennial readers.

1. Make meaning, not money. “As venture capitalists,” Kawasaki said, “we deal with many companies, and often they come in [saying what] they think we want to hear: that they want to make money. It’s been my observation that most companies founded on this concept of making money pretty much fail.

2. Make a mantra, not a mission statement. Bland, generic company mission statements — about “delivering superior-quality products and services for our customers and communities through leadership innovation and partnerships” — serve no one but the consultant brought in to develop them, Kawasaki said. Instead, keep it short and define yourself by what you want to mean to consumers. Nike stands for “authentic athletic performance.” FedEx is about “peace of mind.”

3. Jump curves. Innovating is harder than just staying a little bit ahead of competitors on the same curve.

4. In product design, “roll the DICEE.” That’s an acronym. “D” is for deep, which to Kawasaki means thinking about features that go beyond the norm. “I” is for intelligence, as seen in the design of Panasonic’s BF-104 flashlight, which uses batteries of three different sizes to accommodate the random mix of extra batteries many people have around the house. “C” is for complete — or being not just a product, but including support and service. The first “E” is for elegance: Beauty matters, according to Kawasaki. The second “E” is for emotive. “Great products generate strong emotions: Think Harley Davidson, Macintosh.”

5. Don’t worry, be “crappy.” This doesn’t mean ship a bad product, but “your innovation can have elements of crappiness to it,” Kawasaki said.

6. Polarize people. Try to be all things to all people and you often ship mediocrity, Kawasaki said.

7. Let 100 flowers blossom. Borrowing from Chairman Mao, Kawasaki said you never know where the flowers will emerge, so let them grow.

8. Churn, baby, churn. Always improve. Listen to customers for ideas.

9. Niche yourself. Find your place, Kawasaki urged.

10. Follow the 10-20-30 rule when pitching to venture capitalists. That means no more than 10 PowerPoint slides, a limit of 20 minutes for the pitch, and using a 30-point font size in the presentation (to keep it simple).

Guy Kawasaki is a terrific entrepreneur and has a great business acumen. All his points are worth noting and evaluating as us Millennial’s advance our professional careers.


How long to become a millionaire?

I believe everyone has wondered to themselves, “How long would it take me to become a millionaire?” I mean, that seems to be everyone’s financial dream. Everyone always says, “If I only had a million dollars…” Well, I’m here to tell you just how to go about doing that.

Accumulating one million dollars isn’t quite as hard and daunting as most people think. Does it take a lot of time and discipline? It absolutely does, but it’s feasible if you simply save money and invest diligently. Warning, you may need to forgo some weekly coffees, nights out on the town and luxury cars. But trust me in the long run your future self will be very happy.

See for yourself what the power of compounding interest can do for you in your quest to become a millionaire.

$300/month

It will take you 38 years to become a millionaire if you invest $300/month and earn 9% interest annually ($1,017,493).

Less than $500/month

If you increase your monthly savings to $458, it would take you 34 years to become a millionaire ($1,035,432). I know what you’re thinking…$458 is an odd number. Yes, on the surface it is. I used $458/month because that equates to maxing out a Roth IRA, which I encourage all Millennials to do. The maximum you may contribute to a Roth IRA is $5,500. In order to hit that via dollar cost averaging, you would need to contribute $458/month.

$458/month may sound like a lot of money to some people but it’s really not. If you earn $55,000/year and save 10% of your income for retirement, that would equate to $5,500/year (the max for a Roth IRA), or $458/month. At a minimum, all Millennials should be saving 10% of their earned income towards retirement. And I mean, at a minimum. Most financial experts advise you save between 15-20% of your income in order to retirement comfortably. And by “comfortably” most financial experts mean your retired by age 65. I’m shooting for 60, if not sooner. How about you?

Millionaire in 30 years or less

What if you lived well below your means, drove a car payment-free, and lived a bit more frugal of a lifestyle versus buying more extravagant, name brand items? If you could save $700/month it would take you 29 years to become a millionaire ($1,042,749).

Looking to become a millionaire in 25 years or less? You would need to invest $1,000/month with a 9% annual return ($1,016,419). $1,635/month would get you one million dollars in 20 years ($1,000,697).

How to be a millionaire in 10-15 years?

Okay, let’s pretend you’re really, really impatient and want to save one million dollars ASAP. If you have the resources you would need to save $2,850/month to have one million dollars in 15 years ($1,004,146). If you invested $5,500/month you could end up with one million dollars in 10 years ($1,002,735).

Challenge yourself to save as much as possible. Start off small and save $200/month. Then slowly increase that amount as often as you can. When you get a raise, apply it directly to your monthly savings. No Millennial starts off saving $800/month initially. You have to ease your way into it. It’s not going to be easy, but it’s doable. Just learn to live below your means.


I Met the Millionaire Next Door on my Trip to Alaska

I recently returned from a 10-day trip to Alaska, which was amazing and I would highly recommend to anyone. It’s a stunningly beautiful destination that feels so well preserved and uninhabited compared to the rest of the U.S. There are abundant amounts of wildlife, mountain ranges, and vast wilderness. It’s a truly remarkable place.

My wife and I were lucky enough to travel to Alaska for virtually nothing due to a travel agent discount via a family connection. Something I am truly grateful for. Our 10-day guided tour through Alaska retailed at approximately $4,000 per person, plus $500 per person for airfare. So roughly $9,000 per couple, plus spending money, and Alaska is really, really expensive. I heard it was expensive, but it was even more than I expected…like New York City and San Francisco prices for dinning out.

Our guided tour through Alaska included 30 other people on board, most of which were Baby Boomers, if not older. We did introductions at the beginning and everyone was very educated. We had teachers, dentists, accountants, engineers, scientists, and a number of other professionals. And what was truly remarkable was their appearance. Everyone appeared to be your average Joe. No one “looked” like they would spend well over $10,000 on a vacation. That’s an expensive vacation for anyone.

I know this is judging a book by its cover, but it brought me back to one of the best, and most enlightening, books I have ever read; Thomas Stanley’s The Millionaire Next Door. A big premise of the book is that millionaire’s don’t usually “look” like a millionaire. They often don’t drive luxury cars; they’re more prone to drive a Ford F-150 or Toyota Camry. They don’t exclusively wear designer clothing and they are not shopaholics. They are frugal savers, not spenders.

Well the group of 30 Baby Boomers I traveled to Alaska with recently felt like this very crowd. Their attire consisted of wore jeans, sweatpants on some individuals, old sweatshirts, cheap windbreaker jackets, etc. A lot of JC Penny and Kohl’s shopping it looked like. Nothing fancy whatsoever. These were people who had money, they just spent $10,000+ on a vacation, but they save and spend on experiences, e.g. travel, versus materialistic items like cars and clothes.

It’s all very eye-opening to me, as a Millennial who wants to retire rich. As every passing day goes on I am becoming better at delaying short-term gratification because of my long-term financial goals. I’ll hold off on buying a “want” item so that I can continue to save more and more aggressively for my family’s future. So that I can ensure I am one day truly wealth via net worth, not the vanity items people see me with where I “appear” wealthy. The perception of wealth is very different than truly being wealthy. I am locked in only on the latter because I am striving to be the Millennial Millionaire Next Door.



One Big Tax Benefit from a Roth 401(k)

Below is a list of some of my favorite money/personal finance articles from this past week. I’ve sifted through boat loads of articles on money, retirement, personal fiance, budgeting, paying off debt, and buying a home.

All of the below articles are highly relevant to the Millennial generation (Gen Y) and their money. Knowledge is power, and you are your single greatest investment, so continue to educate yourself on money and personal finances right here on this very blog so you can one day become financially independent.

This week’s best articles on money and personal finances, specifically for Millennials



One Big Tax Benefit from a Roth 401(k)

Although some 60% of company 401(k) plans offer the Roth option, less than 20% put any money into it. Employer education could be at fault. Nevertheless, the Roth should be an important piece of your retirement plan. (Forbes)

Retirement-Planning Assumptions: Yes, You Can Be Too Conservative

Of course, I realize that it seems ridiculous to discuss being too conservative about retirement planning in an era in which the median 401(k) balance, per Vanguard’s How America Saves report, was just shy of $30,000 in 2015. But there’s also a segment of the population that could be playing it too safe with their retirement planning assumptions, and those too-conservative assumptions carry costs. Accumulators who are too conservative in their retirement-planning assumptions might short-shrift other pre-retirement goals because they’re trying to swing a gargantuan savings rate, while overly parsimonious retirees might fail to enjoy the fruits of their labors or simply worry about running out of money more than they need to. (Morningstar)

Many Millennials Want to Become Homeowners, But Believe It’s Impossible

But a new NerdWallet analysis that examined a number of surveys and data from government agencies and private organizations found many of these perceptions to be false. Our research showed that a majority of millennials would prefer owning to renting, but they appear to be postponing home-ownership because of real and perceived difficulties in affording it. In fact, our analysis found that millennials, those born from 1981 to 1997, look upon owning a home just as favorably as previous generations. (NerdWallet)

3 Reasons to Pay Off Debt Using the Snowball Method

For debt repayment, there are two popular ways to go about achieving your goal. Those include the “debt avalanche” and “debt snowball” methods. The debt avalanche is when you start off by aggressively repaying your debt with the highest interest rate first. Then you move on to your debt with the next highest interest rate and so on until you’re debt free. The logic behind this method is that debt with high interest is costing you the most money, so you want to get rid of it first. The second method is the debt snowball. Instead of focusing on interest rates, you focus on your debt balances. You pay off debt from the smallest to largest balance, regardless of interest rate. (US News Money)

7 Ways To Save On Back-To-School Expenses

Unfortunately, many families feel the heat of these rising costs, struggling to keep up when wage increases don’t make up for the difference. Huntington Bank Director of Economics, George Mokrzan, says, “With the ongoing slow growth in wages, it is difficult for many families to meet the rising costs of sending children to school. For a family of 5 living at the poverty level guideline of $28,410, the cost of sending three children to school would consume as much as 10% of their income.” (Personal Capital)

How Four 20-Somethings With Student Loan Debt Spend Their Money

There’s no shortage of talk about how the burden of student debt is forcing the nation’s young people to put off life’s big milestones such as buying a home, saving for retirement or starting a family. Survey after survey attempts to draw conclusions about how Millennials are dealing with their money and why. (Forbes)

Happy reading, my fellow Millennials.



How did the stock market do last week (August 22-26, 2016)?

Last week, August 22-26, 2016, was a rough week for the stock market and all indexes, including bonds. All stock market indexes ended the week down and the Fed’s speech from Jackson Hole, Wyoming hinted at raising rates sooner than market expectations. Next week the August jobs report will be released, which should impact the Federal Reserve’s looming rate decision.

Last Week’s Stock and Bond Index Performance (August 22-26, 2016)

  • NASDAQ -0.4% (YTD 4.2%)
  • Dow Jones Industrial Average -0.8% (YTD 5.6%)
  • S&P 500 Index -0.7% (YTD 6.1%)
  • U.S. Aggregate Bond Index -0.1% (YTD 5.4%)



How did my retirement portfolio perform last week (August 22-26, 2016)?

Below is a snapshot of my three biggest retirement portfolio movers in terms of percentage lost last week. Everything in my portfolio was down!

The below funds are held within my work 401(k) plan as well as two separate Roth IRA plans. All accounts are held with Vanguard.

  1. Vanguard REIT Index Fund (VGSLX) -0.9%
  2. Vanguard Target Retirement Fund 2040 (VFORX) -0.6%
  3. Vanguard Small-Cap Value Index Fund (VSIAX) -0.3%

Year-to-date my retirement portfolio is up 8.6%. I am my own portfolio manager. I don’t have help from a certified financial planner. I was a liberal arts major and I do all my own research on investing. My philosophy is to use low-cost index funds and its been working for me for a decade.