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Do you have a net worth goal and did you achieve it before ER ?
Old 01-28-2013, 07:59 AM   #1
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Do you have a net worth goal and did you achieve it before ER ?

Most people are goal setter. Did you have a net worth goal in mind ? Did you achieve that before you decided to take ER? Is retirement a stage for drawing down and you want to spend most of your time enjoying life, and be happy to have a stable nest egg and just let it rides , or you still working on growing your net worth as you are going forth? And if you are the grower group, what percentage of net worth increase do you hope for in 10 to 12 years?
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Old 01-28-2013, 08:08 AM   #2
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Yes and Yes. My net worth has increased since retirement.
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Old 01-28-2013, 08:11 AM   #3
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Yes, we had a net worth goal to meet before I felt comfortable retiring early.

Yes, of course we hope our net worth grows - or at least breaks even in real terms - during our retirement. But if it shrinks somewhat, thats OK too as long as it's very gradual. We aren't trying to pass along a large nest egg to heirs - actually would rather give away the money while we are still living.

Since 1999 we are about even in real terms, so we are quite happy with that.
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Old 01-28-2013, 08:23 AM   #4
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We're still a good number of years out from ER, but we do have a rough NW value that we're aiming at. That is certainly a moving target, but it's there.
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Old 01-28-2013, 08:25 AM   #5
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Yes, although my more important goal was in terms of the dividend income that money was generating. I achieved both before retiring.

My NW is up about 25% since retiring (in 2006), and I would be surprised if in the long run it did not keep increasing (although this is not very important to me). My dividend income is up about 75% (lower valuations now than 2006), which is much more important.
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Old 01-28-2013, 08:26 AM   #6
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Quote:
Originally Posted by bondi688 View Post
Did you have a net worth goal in mind ?
Yes
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Originally Posted by bondi688 View Post
Did you achieve that before you decided to take ER?
Yes
Quote:
Originally Posted by bondi688 View Post
Is retirement a stage for drawing down and you just want to hold your own, so money does not ever run out, or you still hope to grow your net worth as you are going forth?
I doubt anyone will tell you they don't hope to grow their net worth in retirement - no one enjoys seeing their nest egg decline. But for me, having a nest egg large enough to insure it would still grow even after withdrawing from it in retirement would require working, saving and investing far longer than I wished. After 7+ years of retirement our nest egg sits at 96% of what it was when I pulled the plug. I view that as 'holding my own' and I'm very happy with it.
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Old 01-28-2013, 08:36 AM   #7
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I doubt anyone will tell you they don't hope to grow their net worth in retirement - no one enjoys seeing their nest egg decline. But for me, having a nest egg large enough to insure it would still grow even after withdrawing from it in retirement would require working, saving and investing far longer than I wished. After 7+ years of retirement our nest egg sits at 96% of what it was when I pulled the plug. I view that as 'holding my own' and I'm very happy with it.
I think you are doing just fine with your situation, congratulations.
What I was wondering was whether people tend to think of ER as the distribution phase of their lives, and want to enjoy what they have, and not too into leaving a substantial "legacy" to their children? Or is it easy for the FIRED group to get away from the mind set of accumulation, even in retirement, and growing the net worth is not just a happy happenstance, but something they are still actively working on?
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Old 01-28-2013, 08:54 AM   #8
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What I was wondering was whether people tend to think of ER as the distribution phase of their lives, and want to enjoy what they have, and not too into leaving a substantial "legacy" to their children? Or is it easy for the FIRED group to get away from the mind set of accumulation, and growing the net worth is not just a happy happenstance, but something they are still actively working on?
Based on threads like this one...

Paranoid about $$$ Running Out

... and other similar discussions, the transition from saving to spending is tough for some. Many have difficulty losing the ability to 'store up acorns for the winter' and that can make enjoying retirement tough for them. For me the switch from an employer paycheck to withdrawing from my nest egg was easy as I was thrilled to have my freedom from the working world.

Wanting to leave something to your heirs is a highly individual choice. If you do a search or two on the subject you'll find several threads discussing the topic.
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Old 01-28-2013, 08:59 AM   #9
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Based on threads like this one...

Paranoid about $$$ Running Out

... and other similar discussions, the transition from saving to spending is tough for some. Many have difficulty losing the ability to 'store up acorns for the winter' and that can make enjoying retirement tough for them.
I am reading comments on "fear of running out" and saw how often they are relevant to reflecting on my questions. What I am curious about is how large is the group who are not that fearful, and actually have a higher net worth goal they are still striving for?
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Old 01-28-2013, 09:02 AM   #10
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Yes and yes. I'm up 15% from when I retired in 2007. Actually up more than that when adding in a modest inheritance from an aunt in 2009. Also my w/d rate is lower than most retirees so that has helped a lot.
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Old 01-28-2013, 09:10 AM   #11
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I didn't really have a net worth goal. Both of us have COLA'd defined benefit plans. I ER'd at 55 and DW is still working. DW will continue working until she is comfortable with the benefit amount she will get (in about 2 yrs). I decided that we don't need to touch our saving for about 10 yrs. So I guess that is a crude net worth plan.
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Old 01-28-2013, 09:14 AM   #12
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Well, I had set my goal when I was 17... and had planned to retire when I hit 55...

I just turned 55 and exceeded my goal by 50%....

However, got married a few years back and I need 2.5X my original goal to feel comfortable... so, have pushed the expected ER to 60....
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Old 01-28-2013, 09:18 AM   #13
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Repeating myself, but FI and ER are independent goals IMO. We reached FI long before I retired and DW is still (happily) working.

If all goes well our NW will increase during the first half of our retirement, but if you've ever looked at FIRECALC results you know how your portfolio change varies all over the map. If you want your portfolio to increase throughout your retirement, you're probably going to withdraw very, very conservatively. Nothing wrong with that, it's a choice we all make.

Many others here will/have disagreed, but pursuing FI only as a means to ER as soon as possible suggests other potential issues that might be fixable. Nothing wrong with retiring and following your bliss, but work is not inherently evil as some here seem to suggest, work has significant value too.
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Old 01-28-2013, 09:19 AM   #14
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...if you are the grower group, what percentage of net worth increase do you hope for in 10 to 12 years?
FIRECalc says that in the best past years, a 3.5%WR may result in the portfolio growing to 2.8X its initial value. And that's in real dollars, so after inflation, it would be even higher, as one would count his stash in nominal dollars! Whoo Wee!

But, but, but, what about the line that looks like the trajectory of a Kamikaze plane? Ugh! In the worst case, a dollar would have shriveled down to 41 cents. After a short 10 years!

Obviously, YMMV. A lot!


PS. Switching the portfolio from FIRECalc simple default model to its more complex mixed model changes the results to 3.0X and 0.49X respectively.
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Old 01-28-2013, 09:21 AM   #15
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It seems to me that many people here worked or plan to work far longer than they have to. They plan to live off their portfolio instead of spend down their portfolio. Their children will be very well taken care of. I have no children and want no children so I plan to die broke. My goal is to save enough to equal my expenses X the number of years until I reach age 70. So if my expenses are $25K/yr before taxes then I need to save $500K to retire at age 50. This assumes my portfolio grows equal to the rate of inflation. After my money runs out(if it does)I can live on SS because I live on very little. I don't like working and will not work longer than I need to. Based on family history I likey won't live to see 75 so no reason to plan on having money until 95 like some people do.

This plan won't work for people with higher expenses.
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Old 01-28-2013, 09:33 AM   #16
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I am reading comments on "fear of running out" and saw how often they are relevant to reflecting on my questions. What I am curious about is how large is the group who are not that fearful, and actually have a higher net worth goal they are still striving for?
I'd think the best way to get an answer is start a new thread with a simple poll with two options:

1. Although I would prefer it not decline, I am willing to draw down my net worth in retirement.
2. A decline in my net worth is unacceptable. My goal is to continue to grow my net worth once retired.
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Old 01-28-2013, 09:47 AM   #17
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As usual, the poll should have a catch-all option. In this case, it should be: Still undecided. That would be me.

And I forgot to answer the following question.
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Most people are goal setter. Did you have a net worth goal in mind ? Did you achieve that before you decided to take ER?
I did not really have a specific goal while working, other than to have my stash grow, and grow... Then, after discovering FIRECalc and learning about the rule-of-thumb 4%WR, looked at my situation and found that once my children finished college, our then-current expenses (which already included health insurance) would be covered by a 3.5%WR.

So, you can say that I stumbled onto my goal.
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Old 01-28-2013, 09:59 AM   #18
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I had a rough retirement portfolio value goal, not a net worth goal. That excludes home equity and our individual savings accounts, although they are part of Plan B. My goal was to meet our budgeted yearly expenses.

I expect our NW to grow, though I'll spend it down if necessary. Just like FIRECalc suggests in its multiple possible outcomes. We could spend more without trying too hard, but don't have to go hog wild. We're not trying to leave an inheritance, but are trying to mimimize taxes during retirement and for the estate. Having a high NW late in retirement will give us more LTC and family support options if necessary.
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Old 01-28-2013, 10:22 AM   #19
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I'd like it to continue to grow, at least in part to keep up with inflation. I have a tough time imagining my nominal NW will continue to grow at my lifetime pace (double every 4 years) but with enough Fed money printing perhaps it will.
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Old 01-28-2013, 10:47 AM   #20
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As I don't have dependents, my estate will mostly be going to a charitable fund. My priority is my own financial security and I consider my legacy to be icing on the cake. I did have an arbitrary target for RE, but it was for investable assets rather than for net worth. The target was higher than I really needed and I came within 2% of it before throwing in the towel. Of course I want to see NW go up in RE; who wouldn't? With a planned WR of less than 3%, if the markets don't tank, NW should increase in the short term, which would be very reassuring. In the long term, I expect NW to decrease and getting comfortable with that will be another stage of development. Dying broke without a margin for error would make my final years way too stressful.
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