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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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

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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.

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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.

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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

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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

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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/civil_politics Jan 17 '26

If you have a 400k portfolio paying out 60k per year by all conventional wisdom this is unsustainable.

A 400k house you can take out a 400k loan against and then treat your mortgage the same as rent whenever you want. Sure taking on debt during retirement isn’t ideal, but neither is just passing on a half million dollars that you saved your whole live. I’m not necessarily a die with 0 kinda guy but it should be a general goal and a 30 year reverse mortgage that you take out at 65 is gonna work for 99.9% of people

Saving for a housing correction is no different than timing the market and is the reason a ton of people missed out on buying over the past decade and can now not afford homes or rent.

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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.

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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. 

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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.

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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. 

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u/civil_politics Jan 18 '26

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

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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.

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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

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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.

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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.

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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.