If we can do it, anyone can?

[Time2]

I get around---the internet. I read many young people saying it is different now. College expenses are to high, houses cost to much, the economy is different, wages are stagnant. Basically I find lots of excuses why the younger generation can't get ahead. It makes me wonder how much of it is true.
My experience, we were middleclass, as I have said here too many times, our average inflation adjusted income was $71k over 37 years. (inflation adjusted means, the $18k we earned in 1981 was adjusted to just above $50k to cipher into the average.) That is slightly above the median US income. But we weren't high income earners. This makes me think yes, If we can do it. The above numbers were in 2018 when we closed the business, so $71k is closer to $78k.
I understand we are a small percentage and most people don't save like many ER readers did. But, if a young couple earns near $80k can they do what we did over 30+ years, or, are things really different?

 

[REWahoo]

But, if a young couple earns near $80k can they do what we did over 30+ years, or, are things really different?

An unanswerable question since that messy "future" thing is involved. Ask me again in 30 years and I'll give you an accurate response.

 

[MichaelB]

My experience, we were lower middleclass, as I have said here too many times, our average inflation adjusted income was $71k over 37 years.

Median household income in the US was $68k last year. If your average income, adjusted for inflation, was above that for your entire career, you were not “lower” middle class, but substantially above that.

 

[street]

I agree with you that "if we can do it, any one can". I really feel the same and I'm not sure it would be easier today then in the time frame that you mentioned. I accumulated my retirement from 1980 to now.

I see what people are making today verses what I made. I could of done a lot better with my finances at today earnings then I did when I worked.

I also beleive there are a lot of young people working today at blue collar jobs that will ER. Those people have that goal and gene to save, know the power of compounding and time is a big deal.

 

[Time2]

Median household income in the US was $68k last year. If your average income, adjusted for inflation, was above that for your entire career, you were not “lower” middle class, but substantially above that.

It depends on who is defining middle class.
Pew research has $47k to $141k. https://money.cnn.com/infographic/economy/what-is-middle-class-anyway/index.html


Wiki defines Lower Middleclass in 2005 as $32,5k to $60k or $44k to $85k in today's dollars.

https://en.wikipedia.org/wiki/Ameri...eau,_distribution_of_personal_income,_2006-21


Kruger in 2018 has $35k to $104k and Thurow has also in 2018 has $52k to $87k

https://www.brookings.edu/research/defining-the-middle-class-cash-credentials-or-culture/


Clearly room for argument on the definition. But I'll bet many here thought they were middleclass earning over $130k.
I have removed the Lower from my post, just so that is not the discussion.


If a young couple earns near $80k can they do what we did over 30+ years, or, are things really different?

 

[Aerides]

Nope, sorry If I Can Anyone Can only works in similar circumstances. The 70's/80's/90's were a different landscape.

Compare the costs of college now vs. then. It's not inflation, that segment is hyper inflated.

Compare starting salaries, largely stagnated for entry level jobs. The job I was happy to get in 1990 for a starting salary of $17k, with full benefits with no degree, would today be worth $35k. It no longer exists, but I had 3 similar offers to pick from back then. 20-year-old me wouldn't even be interviewed today, and the salary would be $20k.

 

[Markola]

In other ways, it’s a lot easier. Index funds and the Internet make learning from others to save, invest and succeed dramatically easier for those who want to. I remember going to the library to look up Morningstar ratings and trying to sort through the useful books from the get rich quick schemes. Money Magazine and other tidbits of information here and there were contradictory and hardly any help. Remember the Dogs of the Dow strategy? There were lots of trendy blind alleys like that and no one online to reference with. The people in my circles who were oriented to personal finance like me numbered exactly zero, so I had to read, think and decide for myself.

If there’s a will, there’s a way, but then as now, there has to be the initial strong will.

 

[nap470]

I like to think of it as a simple mathematical equation of D x T = ER(R).

D=Discipline (or Planning)
T=Time
ER/R=Early Retirement or Retirement

I'm sure a V (variable) could be added to cover unplanned life events, but I like to keep it simple.

 

[MichaelB]

It depends on who is defining middle class.

Well, in 2018 the middle quintile of household income was $63k. 40% of households earned more, and the other 40% earned less. I’d say that’s smack dab in the middle.

Being financially able to retire takes many years of effort and planning, and a fair amount of deferring current consumption to save more. It also helps to be in one of the higher income segments. If your point is someone who spent their adult working life in the middle segment should be able to achieve that, it seems reasonable.

 

[pacergal]

Saving Starting early in your career and consistently staying at it are the key.
DH and I earned middle class income, also, however, we retired with pensions. Not many of those around anymore.
Our retirement may not have been as early if we didn't have that.

 

[CRLLS]

In this area, I think Henry Ford was right. "Whether you think you can or think you can't, you're right" He is right, at least the latter half of his quote. Every generation has faced different challenges than the ones before, financial and social. Conditions will definitely be different for those just starting out than any generation before them. They cannot know what the future will be. They are only guessing and we can only see it through our past experiences under different conditions, not applicable to their future.

I have hope for those who accept those new challenges and adjust for success, just as we did. But, as long as they think they can't make it, they won't.

 

[Time2]

Nope, sorry If I Can Anyone Can only works in similar circumstances. The 70's/80's/90's were a different landscape.

Compare the costs of college now vs. then. It's not inflation, that segment is hyper inflated.

Is a degree needed more now than then? Neither my wife nor I had one, but that was then.

Compare starting salaries, largely stagnated for entry level jobs. The job I was happy to get in 1990 for a starting salary of $17k, with full benefits with no degree, would today be worth $35k. It no longer exists, but I had 3 similar offers to pick from back then. 20-year-old me wouldn't even be interviewed today, and the salary would be $20k.

I'm not sure, I just found out yesterday the uneducated neighbor early 20s girl makes $15 an hour at Walmart. That's $30k. This is Florida and she does have to drive an hour to a higher income area and she pays $175 a week for daycare. So certainly not living large, but $30k.

 

[MRG]

Is a degree needed more now than then? Neither my wife nor I had one, but that was then.




I'm not sure, I just found out yesterday the uneducated neighbor early 20s girl makes $15 an hour at Walmart. That's $30k. This is Florida and she does have to drive an hour to a higher income area and she pays $175 a week for daycare. So certainly not living large, but $30k.

I hired many people who had to have a four degree while I didn't have one. It's a requirement that was introduced after 1984.

Our McDonald's starts people at $14 an hour. They'll need a couple jobs and a roommate or two to be able to rent a place.

 

[stepford]

No-one here will puncture your personal Horatio Alger story. We all believe ours too.

 

[street]

^ even at 30K I would find a way to save. The choice everyone has is what they do with their money. Not everyone wants to sacrifice for be free in retirement years. There is a price to pay to be free financially.

It might take to have roommates, have two jobs, not buy everything in the store etc. to reach your goal. If that is you focus then you will have more then what you need at ER.

 

[razztazz]

^ even at 30K I would (try to) find a way to save..

Context & the invisible hand, as always, would apply.

 

[Sunset]

Is a degree needed more now than then? Neither my wife nor I had one, but that was then.




I'm not sure, I just found out yesterday the uneducated neighbor early 20s girl makes $15 an hour at Walmart. That's $30k. This is Florida and she does have to drive an hour to a higher income area and she pays $175 a week for daycare. So certainly not living large, but $30k.

For many/most high paying jobs a degree is needed, if for no other reason than the job competition will have one (proof can learn if nothing else).

At 30K/yr it can be tough to live on that with a child/children.

One thing that irks me a bunch when anyone complains about not having enough money, is they often don't see all the little vampire spending they do.
Example is the idea one absolutely cannot live without an iphone and the $70->$100/month service.

 

[OldShooter]

Nassim Taleb discusses a concept that is very germane here. He calls it "silent evidence." Here is his illustration:

"Diagoras, a nonbeliever in the gods, was shown painted tablets bearing the portraits of some worshippers who prayed, then survived a subsequent shipwreck. The implication was that praying protects you from drowning. Diagoras asked, “Where are the pictures of those who prayed, then drowned?”

​

Most of us are here on this forum because we did all the right things or at least most of them. But almost certainly the moist important reason we're here is we have had good luck.

Consider those who also did the right things, but had bad luck: Picked the wrong parents, extended joblessness, medical catastrophes, divorces, business failure, a need to support aging parents or special needs children, ... the list is endless. Those folks are not active in the forum. They are silent evidence proving that not any one can. The truth is that "anyone" cannot. Only the lucky ones win.

 

[FANOFJESUS]

Nope, sorry If I Can Anyone Can only works in similar circumstances. The 70's/80's/90's were a different landscape.

Compare the costs of college now vs. then. It's not inflation, that segment is hyper inflated.

Compare starting salaries, largely stagnated for entry level jobs. The job I was happy to get in 1990 for a starting salary of $17k, with full benefits with no degree, would today be worth $35k. It no longer exists, but I had 3 similar offers to pick from back then. 20-year-old me wouldn't even be interviewed today, and the salary would be $20k.

Good point. Starter jobs were $5 an hour when I was young. The houses I drove by on the way to work you could get for 35k. Now starter jobs pays $12 an hour but those same houses are 130k

 

[Markola]

Nassim Taleb discusses a concept that is very germane here. He calls it "silent evidence." Here is his illustration:

"Diagoras, a nonbeliever in the gods, was shown painted tablets bearing the portraits of some worshippers who prayed, then survived a subsequent shipwreck. The implication was that praying protects you from drowning. Diagoras asked, “Where are the pictures of those who prayed, then drowned?”

​

Most of us are here on this forum because we did all the right things or at least most of them. But almost certainly the moist important reason we're here is we have had good luck.

Consider those who also did the right things, but had bad luck: Picked the wrong parents, extended joblessness, medical catastrophes, divorces, business failure, a need to support aging parents or special needs children, ... the list is endless. Those folks are not active in the forum. They are silent evidence proving that not any one can. The truth is that "anyone" cannot. Only the lucky ones win.

+1. And if the question is wealth-creation, just having the stupendous luck to have been born in a Western developed country at this era of history, especially speaking English, is a massive, unearned or deserved, leg up. I recall a book “Richistan” that pointed out how America, especially, mints millionaires. Of course, we have other problems.

 

[Gumby]

In a nutshell, I was fortunate to have been born with an interest in and a talent for doing things that made good money. And I managed to hang on to some of that money.

A young person could still follow the exact same path I did out of high school and end up in the same position I am now. It would involve a lot of difficult, tedious and unpleasant work, as it did for me, but it could still be done. The exact same jobs are still available and still paying about the same relative to the average income. Actually, that young person could do better than me if they were smarter about managing their career (e.g. doing a better job of self promotion, developing helpful business relationships, changing employers at opportune moments, etc.). I know I left plenty of money on the table because I was not.

 

[OldShooter]

+1. And if the question is wealth-creation, just having the stupendous luck to have been born in a Western developed country at this era of history, especially speaking English, is a massive, unearned or deserved, leg up. ...

Yes. I have a longer version of the "your success is mostly due to luck" sermon that discusses that. Basically for most of us, before we had ever pooped in a diaper we had won the lottery.

Buffett on what he calls "the ovarian lottery:"

“You don’t know whether you’re going to be born black or white. You don’t know whether you’re going to be born male or female,” he explained. “You don’t know whether you’re going to be born infirm or able-bodied. You don’t know whether you’re going to be born in the United States or Afghanistan.”
​

[The ovarian lottery is] “the most important event in which you’ll ever participate,”“It’s going to determine way more than what school you go to, how hard you work, all kinds of things.” For example, “the least-gifted children of high-income parents graduate from college at higher rates than the most-gifted children of low-income parents.”
​

 

[jkern]

Median household income in the US was $68k last year. If your average income, adjusted for inflation, was above that for your entire career, you were not “lower” middle class, but substantially above that.

Statistical averages have little value. Cost of living is regional.

 

[RetiredAt55.5]

Nassim Taleb discusses a concept that is very germane here. He calls it "silent evidence." Here is his illustration:

"Diagoras, a nonbeliever in the gods, was shown painted tablets bearing the portraits of some worshippers who prayed, then survived a subsequent shipwreck. The implication was that praying protects you from drowning. Diagoras asked, “Where are the pictures of those who prayed, then drowned?”

​

Most of us are here on this forum because we did all the right things or at least most of them. But almost certainly the moist important reason we're here is we have had good luck.

Consider those who also did the right things, but had bad luck: Picked the wrong parents, extended joblessness, medical catastrophes, divorces, business failure, a need to support aging parents or special needs children, ... the list is endless. Those folks are not active in the forum. They are silent evidence proving that not any one can. The truth is that "anyone" cannot. Only the lucky ones win.

+1

Sprinkle in some effort, perseverance, ability, patience, and mindset.

But, good or bad luck is a big factor. Not everyone can be a rock star in their chosen career(s). Luck can play a part in that but ability is a big factor.

 

[jkern]

Well, in 2018 the middle quintile of household income was $63k. 40% of households earned more, and the other 40% earned less. I’d say that’s smack dab in the middle.

Being financially able to retire takes many years of effort and planning, and a fair amount of deferring current consumption to save more. It also helps to be in one of the higher income segments. If your point is someone who spent their adult working life in the middle segment should be able to achieve that, it seems reasonable.

In the SF Bay Area minimum wage is around $15 to $16 per hour. For a young couple that's about $66K per year. I t would hard to live what one considers a middle class standard of living on minimum wage.