The "New" American Dream & Retirement Needs an Overhaul

🔥 ^{Hot off the press: Here’s what’s burning up our news feed.} 🔥

• Homeownership is losing its luster and renting is taking center stage

• Retirement wasn’t built for today, it was built for the world decades ago

• Reminder: Keep Tabs on his Week's Economic Revelations

Let’s Chop It Up…

The Battle Between Renting vs. Owning Rages On

Scrolling LinkedIn yesterday and we found this lovely image, and it posed the thought — is there a shift in the “American Dream”? As in homeownership? Let’s look at it.

The Data Breakdown

48% of renters are under 30 years old

• We can infer that renting is particularly popular among younger adults.

• This could be attributed to factors such as increased mobility, delayed homeownership, or financial constraints.

54% of renters earn less than $50,000 in income & 29% earn between $50,000 and $100,000.

• This suggests that renting is more common among individuals with lower incomes, possibly due to the lower upfront costs and flexibility compared to homeownership.

There are 44.1 million renter households

• Likely driven by factors such as urbanization, affordability, and lifestyle preferences.

24.7% of millennial renters expect to always rent

• This indicates a shift in attitudes towards homeownership among this generation.

• This sentiment could be growing due to factors such as the high cost of housing, student loan debt, and changing values around homeownership.

🔑Pepper’s Key Takeaways:

The traditional "American Dream" has long been associated with owning a home, symbolizing stability, financial success, and personal achievement. However, the data and insights we've discussed on renters in America suggest that this ideal may be evolving or even fading for some segments of the population.

• The priorities and values of younger adults have shifted away from homeownership, as they may prioritize experiences, flexibility, and mobility over the traditional dream of owning a house.

• The cost of borrowing money to buy a home has increased, making it even more challenging for those with lower incomes to realize the dream of owning a home.

• Owning a home is no longer a realistic or desirable goal for many. Factors such as student loan debt, high housing prices, and changing values may contribute to this shift in attitudes.

Retirement Wasn’t Built For This

Everyone seems to be in a scramble regarding how (or if) they will be able to retire, but the system of retirement was not built for today’s time.

And if you are a younger individual 🙋‍♂️🙋‍♀️, it most certainly will not be able to carry you when it’s your time to retire.

Give us ~ 2 mins so we can break down the following…

• The data from back then to now

• Why it’s seemingly “failing”

• What needs to happen to fix it

The Breakdown

So if you look at the table above you see there are wild variations in life expectancy, age ceilings, etc. from ~100 years ago. Rightfully so, since technology and modern medicine have made giant strides in that time

(remember when smoking was a weight loss tactic 😂)

Now not to go in too deep (I plan on writing a post on this later) but here’s what’s happened:

1. Social Security was introduced in 1935 when the life expectancy was low (~ 50 years). Meaning that if you did make it to retirement age (65) then you were only reaping Medicare, and social security for a short time (max ~12 years).

2. Fast forward 88 years to today and the average life expectancy is ~ 87. Meaning people are drawing from government sources and their savings for 20+ years. (Talk about a jump)

And guess how much that’s costing….(Drumroll please 🥁)

From Your savings: ~ $477,000 More

_{(if you are in retirement for 21 years and need $53K annually)}

From Social Security: ~ $197,316 More

_{(if you draw for 21 years @ their standard $1,827/month rate)}

What Has to Change

Well for starters, social security could very well be insolvent in the near future (meaning those looking to draw from it within the next 50 years may not be able to). So here’s what’s going to have to give:

1. The realization that you will need to work longer, save more, or BOTH.

2. Healthcare will need to be a priority. Your health declines as you age and healthcare is one of the most expensive aspects of retirement.

3. Saving can not be put on the back burner. At all. Compounding interest is your only friend in this fight.

🔑Pepper’s Key Takeaways

Salt & Pepper is all about preparation over procrastination because it’s proven to be a saving grace time and time again. We plan on expanding into this topic on our website soon but for the big takeaways this is it:

• Plan to be your only source of retirement. Social Security may not be a viable source when your time comes.

• Save like you mean it. Accounting for lifestyle, health, and leisure that 3% contribution may not be enough.

• Be ready to work longer. It’s likely that life expectancy will only continue an upward trend.

• Be honest. “Retirement” may look more like a side job after 65 and less like a beach vacation.

A Gentle Nudge: Remember to Keep Tabs on his Week's Economic Revelations! 📊👀

The Federal Reserve has raised interest rates for the 10th time (we’re now between 5% to 5.25%) in an effort to combat inflation, and this week's economic data will provide further insight into price trends.

The Consumer Price Index was released on Wednesday and revealed what was expected. A 4.9% annual increase as of April and a 0.4% increase from March. Although the index has dropped from a 9.1% peak last June, it's still significantly above the central bank's 2% target.

Last week's stronger-than-expected U.S. jobs report suggests that upward pressure on prices continues.

Don’t Forget: These Other Reports Drop Today and Friday

🗓️ Thursday, May 11:

• The U.S. Department of Labor's initial jobless claims, aka the Layoff and Unemployment Benefits Chronicles 📈

• Bureau of Labor Statistics' monthly Producer Price Index for April, an exciting look at the inflation caused by production costs 🏭

🗓️ Friday, May 12:

• University of Michigan's riveting preliminary reading of May's Consumer Sentiment Index, measuring just how pessimistic Americans are about the economy.

🔑 Salt's Key Takeaways:

So, the Fed has raised interest rates AGAIN to combat inflation, because apparently, they just can't resist making our lives more expensive. The next two days will reveal additional economic data that will tell us just how much more excitement we can expect in our already pricey lives.

Remember..be on the hunt for the two reports dropping the next couple of days:

• U.S. Dept. of Labor Jobless Claims or the tally of fellow Americans who've been handed their pink slips 😔

• Consumer Sentiment Index measuring our collective confidence in the economy (spoiler alert: it's low) 😡

So, in conclusion: the Fed is making things more expensive, and we're all just trying to figure out how to afford milk that costs more than a gallon of gas.

Buckle up for some real talk. Our candid, no-nonsense advice may not win popularity contests, but it sure gets results.

1. The straight path to wealth-building: Make more 💼 or save more - that’s it. There’s no in-between, shortcuts or magic tricks, just hard work and dedication.

2. Reassess your priorities: Stash away $1,000 for emergencies, then focus on crushing high-interest debt 💣 before building that 3-6 month safety net. That money is doing you no good if you have high-interest debt eating at you.

3. Embrace the discomfort: Time to trim the financial fat, ditch the splurges, and track every penny 💰. Get serious about budgeting to make the most of your paycheck.

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