On its face, the situation looks dire.
Avocado toast now goes for $22 a pop and iced chai latte can run you $10.
That’s a big problem for millennials, born between 1981 and 1996.
I’m kidding, of course.
But seriously, there’s real trouble afoot:
Northwestern Mutual’s 2024 Planning & Progress Study found the average millennial believes they will need $1.65M to retire comfortably. Compare that to the paltry $62,600 in average retirement savings millennials actually have.
That’s a problem.
Life is getting more and more expensive, and millennials clearly aren’t saving enough.
What’s driving this?
One factor is housing affordability, which is the lowest its ever been on record.
What does this have to do with retirement and savings?
Well, housing was historically a ladder for regular people to build wealth.
That’s why it’s called the housing ladder.
Billionaire Andrew Carnegie famously said that 90% of millionaires got their wealth by investing in real estate. This might be apocryphal, but there’s also truth.
More than any other asset class, real estate has created the everyday millionaire.
It’s arguably the only way through which regular people can access bankable assets on leverage and at scale. With only 10% down, you can lever up your investment 10X.
This is a problem because the average household income is only $74,755.
In other words, the average family can’t afford the average home anymore.
If crypto were simply a tool for gambling, you'd expect households to spend their gains similar to the way lottery winners do.
That's not the case.
Quite the opposite: People are buying crypto for the same reason that prior generations invested in 401(k)s - to save for a future.
To wit, here’s a poignant excerpt from Croesus’s piece on Bitcoin as a savings vehicle:
If you’re a millennial or zoomer, you’ve probably thought about how impossible retirement sounds. It was different for the boomers.
Interest rates were driven down from 15% in 1981 to 0% over three decades, causing equities markets and home prices to soar. If you got in on the ground floor – like the boomers who entered the workforce in the 70s, bought houses in the 80s, and maxed out their 401k contributions for decades along the way – you did great. But there’s no more runway to drive down interest rates. What’s more, the younger generations have already been priced out of homes. Most of my MBA classmates can’t afford to buy a home, and we’re in our mid-30s.
It’s all terribly disheartening. We’ve been told to put faith in the tried-and-true wisdom of responsibly growing personal wealth (get a mortgage, invest in stocks), which became the accepted wisdom because of the tremendous success of the prior generation at stripping that tree of its fruit. There’s not much left there for us, except to take on crushingly large mortgages. And yet, if you just turn around, perhaps there’s a new tree full of opportunity.
This new tree of opportunity is digital assets.
With real estate out of reach, digital property is now filling the gap.
More generally, the rebuke goes something like this:
You lived through a historic 10 year bull market, had 30-year fixed mortgage rates at 2.65%, Tesla trading at $20 and Bitcoin at $300, and somehow you still screwed it up.
Imagine explaining to your grandkids how you missed trading paper money for bitcoin 💀. It still isn’t too late. Millennials, don’t blow this.
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