How should my 31-year-old son begin saving now that he has a job that pays $40,000/year and will live with us? The Moneyist lends some advice:
After moving from job to job with no real direction through his 20s, my 31-year-old son has landed a job that pays $40,000 with health and other benefits and potential for growth in his chosen industry. He has no savings, for retirement or otherwise.
“The share of young adults living with parents declined in the 1950 and 1960 censuses before rising again,” the Washington, D.C.-based think tank said in a report released in 2020. “Young adults have been particularly hard hit by this year’s pandemic and economic downturn, and have been more likely to move than other age groups.” This impacts young adults and their families, and adversely affects the economy. The fewer new households are formed, the less demand for household goods and services.
Your son is fortunate to have parents who are willing to let him stay rent-free, and for such a prolonged period of time. It’s a good opportunity for him to exhale, live frugally and save aggressively: 70% in stocks and 30% in bonds in your 30s and, conversely, 30% in stocks and 70% in bonds in your 70s. He can also open and contribute the maximum to a 401 at work, and a Roth IRA he can contribute to with post-tax dollars while he is in a low tax bracket.
Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.• I live with my girlfriend, 59, who owns several homes and has saved $3 million. I pay utilities and cable, and do lots of repairs.