BankRate.com recently published the results of a survey where they asked people about what the “ideal age” was for certain personal finance milestones. I thought it was interesting to look at the results and compare to our experience (and our son’s) in reaching FIRE (financial independence & retiring early).
Here are some of the milestones:
FIRST CREDIT CARD – My son is 21 right now and still hasn’t gotten a credit card. My wife and I both got credit cards when we were 16 from the local Dayton’s Department Store, which offered ‘Student Accounts’ with a $100 limit. Dayton’s became Target Corporation and you could use the cards there.
I got my first bank credit card when I was about 20 from Citibank and I still have it. Unfortunately, I used it way too much in college and left campus with a couple thousand dollars in debt! I would argue that perhaps there isn’t an ‘ideal’ age to get a credit card. It would be good to not need one at all, other than as a convenience.
START SAVING FOR RETIREMENT – I started saving for retirement in a 401k account at the first MegaCorp I joined when I was still in college. I was probably exactly 22 years old – the same as the survey’s ‘ideal’ age. We were pretty aggressive savers in the plan from early on and it’s amazing to see how much it has grown too.
My son has beaten us by a few years. He socked $1500 into an IRA when he was 19 years old. It’s grown nicely since that time – I think he is up about +15% since he bought it. Investing isn’t a priority of his now since he is still in college, but that’s a great start.
BUY OR LEASE FIRST CAR – I was probably 20 when I purchased the first of several clunker cars that got me through college. I had a 1971 Oldsmolbile Vista Cruiser, a 1973 Ford LTD Country Squire, a 1976 Ford Torino, a 1979 Ford Fairmont Wagon, and my beloved 1979 Toyota HiLux Pick-Up Truck (the ‘Zipster’).
I didn’t pay more than a few hundred dollars for any of these vehicles, so that explains why there were so many of them! My son doesn’t really need to buy a car because we kept my wife’s old car for him to use when she got a newer one. It’s a 2004 Acura TSX sedan. Very practical and dependable, but getting up there in age. With 14 years on it – it’s older than almost all of those cars I had in college!
BUY THEIR FIRST HOUSE – If a condominium counts as a first ‘house’ we beat this ideal age by a few years. My wife and I were about 24 years old when we bought a 650 square foot condo in a small development (with a pool!) in 1990. We had a good friend from college that bought a unit there too. We were able to get in under an ‘Assumable Mortgage’ – which meant the seller could simply assign their current mortgage to anyone that wanted to buy it from them. Super easy. I think our monthly mortgage payment was $314, plus $100 for association fees.
RETIRE FROM WORKING – This is the one we really beat the ‘ideal age’ by quite a few years on. We early retired at 49 – just a couple weeks before my 50th Birthday.
I was surprised that 61 is listed as the ‘ideal age’ since the average age of retirement in the USA wavers between 62 and 63. The study says that Gen Xers (that’s where we fall) are the most optimistic with a goal of 60 years old.
As I’ve written before, if you save half of your income, one could retire in just 20 years – that’s in your late 30s or early 40s. While it may be difficult to save that much early in your working careers, it is possible (particularly if you are married and both partners are working). Still, I think that many people just default to what’s typical and deny themselves the chance to really go for it from early on.
How do your milestone dates line up with these “ideal” expectations?
Image Credit: Pixabay; Survey data & chart from BankRate.com