Net Worth... average median mean

[Mdlerth]

87.5% of statistics are made up

Hmm... This thread has taken a turn that I didn't expect.

The intent was to draw attention to the loose use of the term average.

What's the price of the average house?
What's the average weight of a person?
What's the average time to commute to work?
What's the average IQ? college student?grade school student?politician?


So... Back to the intent. In a world where everyone, every group, every organization has an agenda, the loose use of the term "average" is commonly used to foster those interests.

Roger that. The connection between the word "average" and what conclusions we draw from it can be even more tenuous than you suggest. Consider a distribution that isn't even close to bell-shaped; it might be rectangular or bi-modal or worse. None of our conventional interpretations of "average" might be representative of the population in a meaningful way.

 

[COcheesehead]

To paraphrase REWahoo: Words is hard

To make matters worse, some still confuse net worth and investable assets.

 

[kgtest]

+1.

I drank that 80% (and similar ilk) Kool Aid until I wised up through this forum and others. And yup, after deductibles, insurance, salary level (higher income) taxes, we were living on ~50% of gross income (and keeping 10% of that in cash). Once I tested that (a hundred times) in FireCalc, Fido, etc, I knew we were "there."

Been Retired 18 months, and only the dog is eating cat food. Seriously, cat food is his favorite treat.

Lol, what a great perspective. Although maybe I am just starting out in the career and 80% of my salary would be much less than presumably when I am ending my career.

50 to 80% of a person's ending salary seems reasonable to me. Especially as you age you tend to spend less at least from what I saw with Grandparents. Wants and needs decrease, along with mobility and energy.

 

[Huston55]

If most of the U.S. population saves and invests and lives below their means to create tremendous amount of net worth and retire early the entire USA economy would collapse.

OK, first, I’m not an economist. But, this (overused warning) is simply wrong. And, any examples to the contrary (like the Paradox of Thrift, etc.) apply to isolated and/or extreme circumstances (The Great Depression, The Great Recession, everyone waking up tomorrow & completely changing their lifestyle). If you read about the Solow Model, it will demonstrate near term economic growth rate increase from increased savings with a return to normal economic growth in the long term; not economic collapse.

Unfortunately, we will not see most of the US population LBYM in our lifetimes, much less everyone change behavior simultaneously. But, if this did happen, it would happen gradually over a period of many years. And, that would be overwhelmingly good for the US economy and, likely life in general. Personally, I like this MMM prediction but, YMMV.

What if Everyone Became Frugal?

 

[Huston55]

Creating and accumulating net worth takes a lot of sacrifice, living below your means, staying out of debt and investing in mutual stock index funds every month regardless of share price. Some of the people I know that have varying sources of annual incomes also don't have a clue to create and grow wealth but the accumulate many toys in their lives . In regards to inner city govt subsidy I would have to add this applies to the blue collar crowd that lives beyond the inner city and also lives off our govt social programs that qualify to receive aid. I asked an old friend who lives out in the country ( not inner city) why doesn't he apply for a promotion at work to earn more income. He replied if he makes more $$ he would no longer be eligible for govt aid. The fleecing of America.

Thank you.

It appears we need a new ‘geographically insulting’ description for those “...government subsidy folks that live off the government teet...”

https://archive.nytimes.com/www.nytimes.com/interactive/2012/02/12/us/entitlement-map.html?_r=0

Perhaps, “Flyover Freeloader” or “Pastoral Parasite”.

 

[mrWinter]

Staggering numbers really, when you consider that these numbers include the value of one's home you realize that the median person really has less than 0 retirement savings, they may have a net worth equal to the cost of their home ($224k median at age 65), meaning $0 cash or investments to spend on other things.

 

[mrWinter]

32% of retirees hold a pension that pays a median of 25,000
median Social Security payment is $14,400 so for a median couple they are receving 28K in SS benefits, which would be tax free along with 7K from their net worth. and 16K on average of pension benefits (25K *.32 * 2 for a couple) for a total of 51K at the median, median US income is 60K so that 51K is 85% of US median income and would be mostly tax free unlike those working. 23% of over 65 are working for a median income of 25K per year, that is probably helping those that have no pension

Good point, if these numbers exclude pensions (which maybe depending on definition is accurate) then they are really misleading when comparing to people without pension, apples to oranges.


I guess some large number of retirees have paid off their house (net worth equal to cost of house) and are living off pension + SS, which maybe isn't so bad.

 

[24601NoMore]

IMHO, it's far better to have an accurate handle on your spending and expected spending in retirement and base your target nest egg amount off of X times that number, than to base it off income.

Far too many articles saying to base your # off current, pre-retirement income. I do think that misleads a heck of a lot of people as they should be focused on expenses instead.

 

[COcheesehead]

IMHO, it's far better to have an accurate handle on your spending and expected spending in retirement and base your target nest egg amount off of X times that number, than to base it off income.

Far too many articles saying to base your # off current, pre-retirement income. I do think that misleads a heck of a lot of people as they should be focused on expenses instead.

I think most people don't have much of a clue as to what their expenses are, but most know what they make so it becomes the low hanging fruit approach to planning.

I agree with you that planning should be based on expenses, not income.

 

[tominboise]

He had a good job doing coding/engineering or something like that, but got burned out and quit. And then, he had to move out of the place he was staying, so I've been letting him crash here until he can find a job. He's 27.

27 is too young to "burn out" and quit. He needs to man up and go to work everyday like the rest of us.

 

[ckelly78z]

Staggering numbers really, when you consider that these numbers include the value of one's home you realize that the median person really has less than 0 retirement savings, they may have a net worth equal to the cost of their home ($224k median at age 65), meaning $0 cash or investments to spend on other things.

This why those reverse mortgages have become popular. Many people don't plan for anything but their next meal, and retirement is just a dream that is reality before they know it.

 

[HFWR]

I think most people don't have much a clue...

Fify...

 

[JustCurious]

Frightening that half of the pre-retirement group has under $187K of net worth (including their home), when it will require $1M to generate a $40K annual retirement income with a 4% withdrawal rate.

It's not that frightening when you consider social security benefits.

 

[Teacher Terry]

My friend lives in a senior apartment and has savings. She said most there live on SS alone.

 

[Nick12]

Staggering numbers really, when you consider that these numbers include the value of one's home you realize that the median person really has less than 0 retirement savings, they may have a net worth equal to the cost of their home ($224k median at age 65), meaning $0 cash or investments to spend on other things.

When I went one evening with my peers to check out the nightly fireworks at Epcot at Walt Disney World some of the Brazilian guests vacationing in Orlando and Disney remarked “ wow there are do many elderly people still working in America”. Retirement age in Brazil is 52.

 

[imoldernu]

As the subject has begun to touch on those living on government largess, the solution for this has been obvious for centuries.

May I suggest this fairly short read to those not already familiar with the simplest resolution of the problem. Written in 1729

https://www.gutenberg.org/files/1080/1080-h/1080-h.htm

 

[HI Bill]

To make matters worse, some still confuse net worth and investable assets.

Yes, because they think that net worth is all that matters. My tracking spreadsheet used to be titled Net Worth, but it's been NIA (net investable assets) for a number of years. For the purposes of retirement planning, what you paid for your house is irrelevant, if it's paid off, and if you're not planning to sell (other than for calculating property taxes). Hawaii has one of the highest percentages of millionaires because of the property values. That doesn't mean most are in any position to retire any time soon!

 

[gerntz]

We choose to keep our MAGI so we can afford HI through the ACA. In so many ways, a higher income does not justify the services some people need. Daycare for a couple of kids can easily cost 30K/year. Is it worth it to work? And if that 30K job does not offer HI, what choice do you have to not go on ACA. And if the job offers HI, it's usually terrible and expensive. Even if you make $60-70-80K and $30K goes to daycare.

This is complicated for the middle class.

Not surprising that HI is one of the states losing population.

 

[aja8888]

As the subject has begun to touch on those living on government largess, the solution for this has been obvious for centuries.

May I suggest this fairly short read to those not already familiar with the simplest resolution of the problem. Written in 1729

https://www.gutenberg.org/files/1080/1080-h/1080-h.htm

That was a bizarre read. Strange times in England and Ireland back then. Thanks...

 

[haha]

Frightening that half of the pre-retirement group has under $187K of net worth (including their home), when it will require $1M to generate a $40K annual retirement income with a 4% withdrawal rate.

Not to worry, they will just demand more of yours!

Ha

 

[reneeh63]

We choose to keep our MAGI so we can afford HI through the ACA. In so many ways, a higher income does not justify the services some people need. Daycare for a couple of kids can easily cost 30K/year. Is it worth it to work? And if that 30K job does not offer HI, what choice do you have to not go on ACA. And if the job offers HI, it's usually terrible and expensive. Even if you make $60-70-80K and $30K goes to daycare.

This is complicated for the middle class.

Working does have a fringe benefit called "Social Security". It also likely allows for additional investing in a 401(k), or similar. Kids don't stay kids forever and losing skills over 5-10 years may make you virtually unemployable in your chosen field. So yes, working has its justifications.

 

[Independent]

When I went one evening with my peers to check out the nightly fireworks at Epcot at Walt Disney World some of the Brazilian guests vacationing in Orlando and Disney remarked “ wow there are do many elderly people still working in America”. Retirement age in Brazil is 52.

That may be changing.

SÃO PAULO, Brazil — In much of the world, workers would find it hard to imagine being able to retire at 55, earning 70 percent of their final salary for the rest of their lives.

But in Brazil, that has been the norm for decades, ...

It also accounts for about a third of all government spending in Brazil, and contributed to a record budget deficit in 2016.

Analysts and politicians across the political spectrum have long recognized that the pension system is unsustainable and a major factor in the country’s continuing economic struggles.

“Brazil has one of the most generous systems in the world,” said Chris Garman, managing director of the Americas for the Eurasia Group, a political risk consultancy. But without a pension overhaul, he added, “Brazil is heading for insolvency and debt crisis.”

A jarring reminder of that came last month when Standard & Poor’s downgraded the credit rating of Brazil, Latin America’s largest economy, sending it even further into so-called junk territory, or below investment grade.

Part of the reason Brazil has managed this is the population distribution. Here are population pyramids for Brazil and for the US.
https://www.populationpyramid.net/brazil/2017/
https://www.populationpyramid.net/united-states-of-america/2017/

 

[WestUniversity]

+1.

Once I tested that (a hundred times) in FireCalc, Fido, etc, I knew we were "there."

Hah! I did the same thing. Between FIRECalc, my InvestCo calculator on their website, numerous other website calculators as well as my own elaborate spreadsheet...

 

[Sunset]

As the subject has begun to touch on those living on government largess, the solution for this has been obvious for centuries.

May I suggest this fairly short read to those not already familiar with the simplest resolution of the problem. Written in 1729

https://www.gutenberg.org/files/1080/1080-h/1080-h.htm

I'm going to take more care at the grocery store when looking at baby back ribs ..

 

[mickeyd]

I only care about my NW. That makes me selfish, I guess.