Time for some more Friday 401(k) Fun with another roundup of the absurd and offbeat, courtesy of a few recent news items that should be of at least peripheral interest to 401k advisors—and just might raise an eyebrow.
60% of Millennials think winning the lottery is a solid retirement strategy
File this under “things that make you smack your own forehead.”
According to a new survey conducted by consumer investing app STASH on attitudes toward investing, approximately 40% of U.S. consumers—and nearly 6 in 10 Millennials—say winning the lottery could be a good retirement bet.
STASH partnered with Propeller Insights for an online survey of 1,156 respondents in March which found the disturbing responses.
“Playing the lottery may be fun, but it’s the opposite of a safe bet,” said Brandon Krieg, co-founder and CEO of Stash, in a statement (of the obvious). “Instead of crossing their fingers and hoping their lottery jackpot dreams come true, people can take concrete steps to improve their finances.”
Of course, a person has a better chance of having any of the following happening to them than they do of winning the lottery:
be killed by a vending machine
This particular survey found 76% of Millennials said they live paycheck-to-paycheck. Nearly half of survey respondents said they would start building retirement nest eggs if they had more knowledge about how and where to invest, and more than one third said access to free, high-quality advice would be an incentive for them to invest.
Yeah, it sounds like they really, really need more knowledge if they think winning the lottery is a solid strategy for funding retirement.
Among all respondents not dependent on a lottery-win retirement, 22% plan to spend their retirement working a part-time job, 4% hope to find cheaper living abroad, another 4% will depend on their children, and 3% will look for a rich spouse to support them.
Broke Millennials flock to Dave Ramsey?
Dave Ramsey, who advises people not to contribute to a 401(k) until all their debts are paid off, is on the cover of the May 2019 issue of Moneymagazine, with a headline that calls him “The Debt Slasher,” and asks the question of whether his advice is sound.
From the article: Today, Ramsey’s core advice is driven by the seven “baby steps” he devised after digging himself out of that hole [almost lost everything in the mid-80s, which is explained earlier in the article]. You start with a $1,000 emergency fund and then throw all your discretionary income into paying off your debts—no saving for retirement, no eating out, no shopping for things you don’t absolutely need—until you’re in the clear.
While most of the article focuses on stories of Millennials following his advice to get out of debt (and avoid college debt), there is only minor mention of retirement advice.
Still, there were quite a few eye-opening stats gleaned from the article:
- Roughly 15 million people tune in to The Dave Ramsey Show on the radio every week, where it airs live on more than 600 stations nationwide. Only Rush Limbaugh and Sean Hannity have bigger audiences.
- He’s also a social media mogul. More than 6 million people follow him across Twitter, Instagram, and Facebook. Over the past year, his YouTube channel got 35 million views, and his podcast was the fifth-most downloaded program on the Apple app in 2018. 60% of people who talk about Ramsey on Twitter are Millennials.
- Ramsey has a new headquarters in the works—a 47-acre campus in Williamson County, Tenn., set to open this summer. Industry estimates put his net worth at around $55 million.
Where the rich are richer
According to financial website GOBankingRates, most people consider the top 5% and 1% of earners in any given state to be rich. “You might be surprised to learn, however, that there’s a vast discrepancy between the 5-percenters in one state as compared with some others,” says a recent piece on the site, referring to its rankings of “How Much You Need to be in the Top 5% in Every State.”
The site used data from the U.S. Census Bureau’s 2017 American Community Survey and the Economic Policy Institute’s income inequality report to determine the average income for each state and Washington, D.C.
So where are the rich richest?
- Washington, D.C. Although it’s not technically a state, residents of the nation’s capital earn the highest average salary anywhere in the country, at $116,090. Things are even better for the district’s top 5%ers, who also earn the highest average salary in the nation at $582,044.
- Among the states, Connecticut has the highest average income for the top 5% of earners, at $529,367. The state’s 1%ers have the highest average income in the country, at just over $2.5 million.
- Seven states in the country—eight if you include Washington, D.C.—in which you’ll need at least $250,000 to reach the top 5% are: California, Connecticut, Massachusetts, Maryland, New Jersey, New York and Virginia.
Where the rich are poorer?
- Mississippi has very low limits to qualify earners as rich. The lower limit of the top 5% is the smallest income in that category in the entire country at $154,295. The state also has the second-lowest average income for 1%ers, at $580,461.
- West Virginia ranks as the second-easiest state of all to crack into the top 5% of earners ($155,823). The state has low incomes overall, so that’s not a surprising development. Even the top 1% earns the lowest average salary among that group in the country, at $535,648.
- SEE ALSO: How Much Financial Advisors Earn by State
Does an advisor need a big, fancy office?
The debate rages on…
Watched a short video from MM1 Collective (a training program for financial advisors) on the topic this week featuring financial advisor Jason Wenk, who leads Retirement Wealth Advisors, Inc., and FormulaFolio Investments.
Although he has a big, fancy office for his companies, which he founded in Grand Rapids, Mich., where about 60 people work, he has since moved to California and does most of his work from his home, allowing him to spend much more time with his family and pursuing other interests.
According to a 2017 Inc. 5000 piece, Wenk doesn’t shave, shower or commute most days (his company also has an outpost in San Juan Capistrano, Calif.), but cutting out those monotonous time-sucking things helped him grow his company.
“In fact, I had my best year ever as a practicing financial advisor, almost $70 million of business while working from home, and really only probably working only 20 hours or less per week,” Wenk says in the video.
“If it works for you, make sure you do it,” Wenk says of the need for a big, fancy office. “Is it necessary? Absolutely not.”
Fancy office or no fancy office: What do you think? Please share your opinion by using the Disqus comment tool below.