25 years old and deep in debt

[alfred russel]

Word from our very own Federal Reserve! If you aren't rich by 35, you never will be. Your professional life is basically set by 40. If you haven't made it by then, you won't. You can actually expect to see your income fall after 45 if you haven't struck it rich.

http://www.msn.com/en-us/money/savingandinvesting/if-youre-going-to-get-rich-do-it-by-age-35-it-will-probably-be-your-last-chance/ar-AA9iPEp?srcref=rss

If You're Going to Get Rich, Better Do It by Age 35

Millennials aren't given a lot of credit. They tweet too much. They Facebook too much. They've all moved back home with their parents and would rather spend time polishing their selfies than their resumes. Still, it turns out they've been doing one useful thing all along: building up permanent income potential.

According to a new report from the Federal Reserve Bank of New York, most people establish their lifetime earning power within the first ten years of their career. After age 35, income growth pretty much flattens, so if you haven't struck it rich by then, it's probably never going to happen.

"Across the board, the bulk of earnings growth happens during the first decade," wrote authors Fatih Guvenen, Fatih Karahan, Serdar Ozkan and Jae Song. "...[And] with the exception of those in the top 10% of the LE (life earnings) distribution, all groups experience negative growth from ages 45 to 55."

The revelation is part of a major study that the authors undertook into the earnings of American men, analyzing data from approximately five million workers spread out over a period of 40 years. (They did not, it appears, include women in the data points.)

Perhaps unsurprisingly, the authors found that results vary widely depending on how much money you make. In fact, wealth is an overwhelming determinate in how much you can expect to continue earning.

The Rich

The wealthy are the exception to aging out at 35. Starting in the top 10%, those in this group continue to increase their average earning power past their mid-30's. After age 45, only the top 2% of earners can expect to make more money.

From age 25 to 55, workers in the top 90th percentile increase their earning power by 127%. In the 95th percentile that number swells to 230%.

By the top 99th percentile (the epithetical 1%), a worker will generally increase his earning power 1,450% over a 30-year career.

The Rest

The median worker has an income growth of 38% over his career, virtually all of which will come before age 35. Starting at age 45, that will probably even slip a little.

For workers on the bottom 20% of the spectrum the numbers are considerably worse. Over a lifetime, they actually lose earning power and can retire making less than the day they started.

The good news for middle class workers is that they have a lot less to fear from sudden changes to income, or "shocks." The less you earn the more likely it is that sudden swings will be positive, or at least short lived.

"Positive shocks," the authors wrote, "to high-earnings individuals are quite transitory, whereas negative shocks are very persistent; the opposite is true for low-earnings individuals.

"It seems that the higher an individual's current earnings, the more room he has to fall and the less room he has to move up," the authors wrote.

This is economist for, "the bigger they are, the harder they fall." The wealthy experience more and worse income dips because they have more to lose, while the poor and middle class have more to gain and less ground to recover in case things go badly. Cold comfort sure, but it's better than nothing.

Combined with their findings on age, the authors found that "the lower 95 percentiles and the top 5 percentiles display patterns with age and recent earnings that are the opposite of each other." We live in different worlds.

Read More:Widening Income Gap Is Risk To U.S. Financial System, Experts Say

All of this matters, because understanding lifetime earning is a major determinant for financial decisions. A worker who has better times ahead will feel in a good position to take out a mortgage, while someone with more to fear might begin hoarding his nuts. Getting that call right can mean the difference between a comfortable retirement and an underwater three-bedroom.

This is also a dire warning sign for Millennials.

As a generation that came of age during the Great Recession, many, if not most, of Millennials got out of school and took whatever jobs they could get. Cohort-wide, they suffered a 9% loss to their income, considerably more for some. Although economists have long warned that it would take years for this generation to catch up, and this paper suggests that that might never happen.

The earnings hangover from a recession can last for years. Unfortunately for Millennials, by the time their incomes rebound to historic norms, it may simply be too late. For a 34-year-old who's finally caught up, it's not merely that he's lost all of the money he would have made in the previous ten years. He's also probably about one year away from peaking out altogether. That lost ground will never come back.

So for all of the young workers out there, now is the time to push for more. Establish your earning power early . . . while you still have the chance.

[KRonn]

Word from our very own Federal Reserve! If you aren't rich by 35, you never will be. Your professional life is basically set by 40. If you haven't made it by then, you won't. You can actually expect to see your income fall after 45 if you haven't struck it rich.

I'm 62 so I guess I'm way past getting rich.     But at least getting near retirement, though it's a marker I never thought about reaching but I'm glad that I planned for it anyway.

[CountDeMoney]

Your professional life is basically set by 40. If you haven't made it by then, you won't. You can actually expect to see your income fall after 45 if you haven't struck it rich.

They don't mention what happens when it's all taken away by 45.  Berkut giving you shit for bitching about it is not much of a consolation prize.

[mongers]

Your professional life is basically set by 40. If you haven't made it by then, you won't. You can actually expect to see your income fall after 45 if you haven't struck it rich.

They don't mention what happens when it's all taken away by 45.  Berkut giving you shit for bitching about it is not much of a consolation prize.

Well then you just have to go big and long.

[MadImmortalMan]

Huh. My income quintupled in the years between 27 and 32.

Honestly though I think it's a risk-taking thing. If you haven't taken risks by 40 you probably won't. But there's nothing actually stopping a 45 year old from it.

[crazy canuck]

Huh. My income quintupled in the years between 27 and 32.

Honestly though I think it's a risk-taking thing. If you haven't taken risks by 40 you probably won't. But there's nothing actually stopping a 45 year old from it.

It is easier to take risks when young, unattached and with little in the way of financial obligations.  By the time people hit their 40s there will likely be a large number of reasons why taking a risk makes very little sense.

[Jacob]

Huh. My income quintupled in the years between 27 and 32.

Honestly though I think it's a risk-taking thing. If you haven't taken risks by 40 you probably won't. But there's nothing actually stopping a 45 year old from it.

It is easier to take risks when young, unattached and with little in the way of financial obligations.  By the time people hit their 40s there will likely be a large number of reasons why taking a risk makes very little sense.

I hope that's what it is because I'm taking risks right now and I'd hate for that to be for naught because I'm 40.

[crazy canuck]

Huh. My income quintupled in the years between 27 and 32.

Honestly though I think it's a risk-taking thing. If you haven't taken risks by 40 you probably won't. But there's nothing actually stopping a 45 year old from it.

It is easier to take risks when young, unattached and with little in the way of financial obligations.  By the time people hit their 40s there will likely be a large number of reasons why taking a risk makes very little sense.

I hope that's what it is because I'm taking risks right now and I'd hate for that to be for naught because I'm 40.

Being 40 doesn't mean you can't take risks.  But I do take issue with MiM's assertion there is nothing actually stopping any 45 year old from risk taking.  A lot of 45 year olds will be at jobs or in careers which, while they may not make them rich, will at least provide a living.   

[MadImmortalMan]

There are certainly reasons they would be less likely to do so at 45. I mean you'd presumably have had time by then to accumulate them. You'd have more to lose.

[Ideologue]

Wealth and success is all a matter of risk taking.  It's a sure thing, as long as you take the risk--that's why they call it "risk"!

[Jacob]

Being 40 doesn't mean you can't take risks.  But I do take issue with MiM's assertion there is nothing actually stopping any 45 year old from risk taking.  A lot of 45 year olds will be at jobs or in careers which, while they may not make them rich, will at least provide a living.   

Yeah I know, that was a little tongue in cheek.

[crazy canuck]

Being 40 doesn't mean you can't take risks.  But I do take issue with MiM's assertion there is nothing actually stopping any 45 year old from risk taking.  A lot of 45 year olds will be at jobs or in careers which, while they may not make them rich, will at least provide a living.   

Yeah I know, that was a little tongue in cheek.

[CountDeMoney]

Here's a triple play for all you Languishites:  a Liberal Arts death, and one embodying Southern gentility...filled with dirty filthy whore coozes to boot!  Something for everybody!

Sweet Briar College to close because of financial challenges
By Nick Anderson and Susan Svrluga March 3 at 7:00 PM
Grade Point
Washington Post

For more than a century, Sweet Briar College has offered women a liberal arts education in a pastoral setting near Virginia's Blue Ridge Mountains. Equestrian programs, a tight-knit residential community and, lately, an engineering science degree, have been its hallmarks.

On Tuesday, the college's leadership abruptly announced its closure to stunned and tearful audiences of faculty and students. Officials cited "insurmountable financial challenges," saying the 700-student college, founded in 1901, would shut down permanently in August. An $84 million endowment, officials said, was not enough to offset ebbing demand for their school in a tumultuous market.

"It's so sad," to think of a place that feels like a second home not existing any more, said Katie Craig, president of the student government. All around campus students were wandering, in shock, on the phone with their parents and friends, she said, wondering if all the things they worked so hard to achieve were for nothing.

Emotions were very high for alumnae who joined in on a conference call about the closure Tuesday evening, said Julia Patt, a 2009 graduate who lives in Chestertown, Md. She said people were shocked and kept asking if there wasn't something they could do other than shut down.

Patt said students and graduates have a powerful bond to Sweet Briar. "To have it taken away, there really are not words for it," she said. "I hope other institutions that come to a similar place might see some options. It doesn't have to be like this for everyone."

The closure of the college in Amherst County, north of Lynchburg, continues a painful era of retrenchment for single-sex higher education and is a sign of the perils facing small liberal arts schools of all types.

Fifty years ago, there were 230 women's colleges in the United States, according to the Women's College Coalition. Now, after decades of shutdowns, mergers and coed conversions, there are little more than 40. Some women's colleges remain among the most durable brands in higher education, including Smith, Wellesley, Barnard, Bryn Mawr and historically black Spelman. But others, like Sweet Briar, have faced an increasing financial squeeze and have scrambled to attract new students.

In late 2013, Jo Ellen Parker, then-president of Sweet Briar, said the college was seeking to cut costs and sharpen its focus. The school had excised its volleyball team and classes in Italian and German. Parker said the school planned to highlight what makes it distinctive, including programs that aimed to help women move into careers in science, technology and engineering.

But enrollment continued to slide. In 2010, the college had 760 students. Last fall, it reported 700. It charges about $47,000 a year in tuition, fees, room and board. But to attract students, the college had been forced to discount tuition by an average of about 60 percent, officials said, leaving it in precarious financial shape.

The college's board of directors, in an emergency meeting in Washington, voted unanimously Saturday to close as of Aug. 25, said college President James F. Jones Jr.

"This is a sad day for the entire Sweet Briar College community," Paul G. Rice, the board chairman, said in a statement. "The board closely examined the college's financial situation and weighed it against our obligations to current and prospective students, parents, faculty and staff, alumnae, donors and friends. We voted to act now to cease academic operations responsibly, allowing us to place students at other academic institutions, to assist faculty and staff with the transition and to conduct a more orderly winding down of academic operations."

Jones was blunt about the challenges the school faced: "The declining number of students choosing to attend small, rural, private liberal arts colleges and even fewer young women willing to consider a single-sex education."

Variations on this view, sometimes in cities and suburbs, have aired over the years as many women's colleges have transitioned to admitting men, including Goucher in Baltimore County and Hood in Frederick. Randolph-Macon Woman's College in Lynchburg went coed in 2007, under the name Randolph College.

Coed schools have not been immune from pressure. Virginia Intermont College in Bristol announced its closure last year, and other institutions around the country in recent years have closed or merged. Demand for higher education in some regions has slackened as the economy has improved and as the number of graduates from high schools has dropped or leveled off.

Some women's colleges, however, are thriving. Patricia McGuire, president of Trinity Washington University, said key to the success of her Catholic women's college in Northeast has been the expansion of coeducational graduate programs and an intensive recruiting drive in urban neighborhoods.

That has netted many young women from low-income backgrounds, she said, especially from black and Hispanic families. "This idea that young women don't want to go to women's colleges," McGuire said, is "an artifact" of an era when those colleges were perceived to be mainly targeting upper-class white women.

"There are a lot of women's colleges that are doing fine," said Marilyn Hammond, interim president of the Women's College Coalition. "To say it's a sector issue would not be correct."

At Sweet Briar, the news roiled campus at midday Tuesday. Jones and Rice said faculty were told first, then students.

"That was, as one would expect, very emotional," Jones said. He said his wife is a Sweet Briar alumna. Many of the students were in tears, he said. "They love this place as much as she did. It's very much understandable — grief about losing something that you hold incredibly important down to the core of your being."

Phyllis Jordan, a communications consultant who lives in the District and graduated from Sweet Briar in 1980, said the news stunned her Tuesday.

"I knew that Sweet Briar was in trouble and having tough times. But I had no idea this was the solution they were going to come up with," said Jordan, a former Washington Post editor who is active on the school's alumnae board.

There was an immediate outpouring on social media, of shock and dismay and love for the school. "First thought: I'm going to reunion this year if I have to pitch a tent on the Quad," one alumna wrote.

"There are few things in my life that have caught me more off-guard or been more devastating," one alumna tweeted. "I can't stop crying."

Some current students sounded lost — worried about transferring credits, where they would be next year, what to do. Sweet Briar officials said they would help students transfer, possibly to Hollins University or Mary Baldwin College — two women's schools in Virginia — or elsewhere.

Throughout Virginia, people were talking about the loss of part of the state's history, a school known for its southern charm, its gentility, its early adoption of an engineering degree, its equestrian program. Students and alumnae of other women's colleges reacted with sympathy, as well.

But Sweet Briar's Web site crashed mid-afternoon, leaving error codes and blank spaces where there had been happy images of busy campus life.

[garbon]

I like how that article notes co-ed conversions as a negative.

[CountDeMoney]

I like how that article notes co-ed conversions as a negative.

Well it does kind of eliminate the whole "what makes it distinctive" motif.