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Networth Article says $946K NW at 90 percentile
Old 01-02-2016, 12:38 PM   #1
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Networth Article says $946K NW at 90 percentile

How to Compare Your Net Worth to Others (Without Being Rude) | FrugalFringe.com

Wow! So the article says that if you have $946,000 networth, you're in the top 90 percentile (richest 10%). That will be my networth when I exit my job late next year, yet it doesn't look enough

I suppose most people here are closer to the 95th percentile ($1.87M) or 92th - 93th percentile ($1.4 M - $1.6)

It seems like you have to be in the 93th - 95th percentile to safely FIRE.
Looks like only the richest 7% may be able to FIRE.
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Old 01-02-2016, 12:41 PM   #2
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Largely depends on lifestyle. I've known folks who earned close to $200K / yr and lived paycheck to paycheck.

Lots of old folks are living on SS only.
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Old 01-02-2016, 12:42 PM   #3
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It all depends on your expenses. I would ER now at age 36 if I had $600K in already taxed money or the equivalent in taxable money. That would be a comfortable retirement for me at 3% SWR. Others would feel poor with less than $60K/yr which would require $1.5M at a 4% SWR. It all depends on your expenses.
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Old 01-02-2016, 12:43 PM   #4
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It's all just the ratio of expenses to savings. Any income level where you have some room for savings (FPL+15%?) can do it.
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Old 01-02-2016, 01:23 PM   #5
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A complicating factor is that some of us include home equity in our net worth calculations, while others (myself included) exclude home equity, because we can't spend it. Meaning - if you have $100,000 in home equity, that does not mean you can withdraw $3,000 of it per year.

Looking at the linked article (thanks, OP) it looks as if home equity is included in the various calculations.
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Old 01-02-2016, 01:40 PM   #6
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One of my best friends has practically no net worth, yet lives very comfortably thanks to two excellent pensions and Social Security. He also has a large life insurance policy simply because he wants to leave something to his kids.

Net worth? For him it's completely irrelevant.
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Old 01-02-2016, 01:46 PM   #7
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It seems like you have to be in the 93th - 95th percentile to safely FIRE.
Looks like only the richest 7% may be able to FIRE.
If you have little or no pension, maybe. Seems to me that if you have a generous, COLA'd pension (esepcially if you are retired or close to it), it's possible to retire in reasonable comfort and security with very little savings.

Other folks, and people who are in a pension plan but are younger, they may need a lot more personal savings. The former group for sure, and the latter group may be at high risk to see their deal watered down before they reach the finish line.
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Old 01-02-2016, 01:49 PM   #8
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A complicating factor is that some of us include home equity in our net worth calculations, while others (myself included) exclude home equity, because we can't spend it. Meaning - if you have $100,000 in home equity, that does not mean you can withdraw $3,000 of it per year.

Looking at the linked article (thanks, OP) it looks as if home equity is included in the various calculations.
Of course, whether or not you include home equity may depend on how significantly you plan to "trade down" when you retire.

If you live in Silicon Valley and own a modest $750K home (yes, a $750K home *is* modest there) and you plan to retire to a place where the type of home you want to purchase is $300K, you could make an argument that you can include most of that $450K difference as part of your retirement nest egg (especially if you are MFJ and qualify for a $500K capital gain exemption on the sale of a primary residence). Not all, of course, because of expenses related to selling a home and moving and such, but most of it, yeah.
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Old 01-02-2016, 02:06 PM   #9
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If you have little or no pension, maybe. Seems to me that if you have a generous, COLA'd pension (esepcially if you are retired or close to it), it's possible to retire in reasonable comfort and security with very little savings.
I agree. My Aunt never had any savings(at least not more than low 5-figures) but she does have a Cola'd Illinois( or is it Chicago?) pension which more than covers her expenses. Now that she gets SS in addition to the pension, she is far better off than anyone else in my family has ever been
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Old 01-02-2016, 02:14 PM   #10
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I agree with the factors everyone else has brought up, but I think the biggest one is simply age. For a given level of spending $1M at 75 is probably plenty while $2M at 30 is likely woefully inadequate.
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Old 01-02-2016, 02:24 PM   #11
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I have to laugh at these net worth surveys -- especially ones conducted by the government. Who wants to ever tell someone from the government about their personal finances and all the gold coins buried in the back yard?

With all the dire news about no one having enough money to retire, there sure still seems to be quite a lot of people retiring. Something is not quite right about that.

And to add a cherry on top, most people don't even know how to calculate their net worth, so how could they even answer surveys without just guessing?
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Old 01-02-2016, 02:37 PM   #12
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I have to laugh at these net worth surveys -- especially ones conducted by the government. Who wants to ever tell someone from the government about their personal finances and all the gold coins buried in the back yard?

With all the dire news about no one having enough money to retire, there sure still seems to be quite a lot of people retiring. Something is not quite right about that.

And to add a cherry on top, most people don't even know how to calculate their net worth, so how could they even answer surveys without just guessing?
Exactly. And many high NW people would never disclose this info, even in anonymous survey.
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Old 01-02-2016, 03:22 PM   #13
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These surveys of all families don't mean much to people who are ready to retire. After all, most people are looking at decades of future labor earnings.

The SCF table shows median and mean net worth of
_$81,200 and _ $534,600 if we include all ages. But, if we only look at 65-74, we get
$232,100 and $1,057,000.

Lots of people increase their net worth as they approach retirement.

Note that the SCF definition of "net worth" includes home equity.


It's correct that lots of elderly Americans have very little income other than SS:
Quote:
For 65 percent of elderly beneficiaries, Social Security provides the majority of their cash income. For 36 percent of them, it provides 90 percent or more of their income. For 24 percent of them, it is the sole source of retirement income.[18]

Reliance on Social Security increases with age, as older people are less likely to work and more likely to have depleted their savings. Among those aged 80 or older, Social Security provides the majority of income for 76 percent of beneficiaries and nearly all of the income for 47 percent of beneficiaries
Policy Basics: Top Ten Facts about Social Security | Center on Budget and Policy Priorities

Most of the people who post here don't want to be in the group that gets most or all it's income from SS.
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Old 01-02-2016, 03:30 PM   #14
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I really agree with you.. As we travel to resort towns-Aspen, Beaver Creek, Steamboat, Breckenridge (we live in CO)- all states have these areas with tons of multi-million dollar second (or third) homes.. There is so much wealth out there- and I really mean many, many with untold millions. That doesn't mean to say most aren't are just getting by- it just agrees that most don't tell their true worth.
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Old 01-02-2016, 04:18 PM   #15
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I've been there too, but there are many condos in these resort Colorado towns that are 1/8 or 1/4 % shared ownership. So, a $1 million condo shared 8 ways is just $125,000, or if there are 4 owners - that's $250,000. In the Blueridge mountains, mountain condos and homes are in the $150,000 - $300,000 range but mostly are not shared by 4 owners. But you know, there's a lot of concentration of rich people like actors and actresses and company CEOs who have vacation homes in Aspen or Vail.

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I really agree with you.. As we travel to resort towns-Aspen, Beaver Creek, Steamboat, Breckenridge (we live in CO)- all states have these areas with tons of multi-million dollar second (or third) homes.. There is so much wealth out there- and I really mean many, many with untold millions. That doesn't mean to say most aren't are just getting by- it just agrees that most don't tell their true worth.
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Old 01-02-2016, 04:25 PM   #16
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I really agree with you.. As we travel to resort towns-Aspen, Beaver Creek, Steamboat, Breckenridge (we live in CO)- all states have these areas with tons of multi-million dollar second (or third) homes.. There is so much wealth out there- and I really mean many, many with untold millions. That doesn't mean to say most aren't are just getting by- it just agrees that most don't tell their true worth.
Many multimillion dollar homes are mortgaged to the hilt.

Many wealthy people hold most of "their" wealth in closely controlled corporations. On paper, their personal assets are much lower than they would otherwise be. I include myself in this number.

Having studied accounting, I am quite certain that a home, being an asset, is included in net worth, just as any debts on the home are liabilities also included in the calculation. Forum members may calculate whatever they wish, but if they exclude their home values, they are not calculating their net worth. I choose to refer to my non-home assets as my investment portfolio.
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Old 01-02-2016, 04:30 PM   #17
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I agree with the factors everyone else has brought up, but I think the biggest one is simply age. For a given level of spending $1M at 75 is probably plenty while $2M at 30 is likely woefully inadequate.
The other thing is that with the possible (probable?) exception of medical and long term care spending, research has shown that discretionary spending tends to drop beyond the mid-70s.
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Networth Article says $946K NW at 90 percentile
Old 01-02-2016, 04:35 PM   #18
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Networth Article says $946K NW at 90 percentile

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Originally Posted by Amethyst View Post
A complicating factor is that some of us include home equity in our net worth calculations, while others (myself included) exclude home equity, because we can't spend it. Meaning - if you have $100,000 in home equity, that does not mean you can withdraw $3,000 of it per year.

Looking at the linked article (thanks, OP) it looks as if home equity is included in the various calculations.

+1.

Home equity. Whether or not you have a pension, and how close you are to the end of your existence, i.e. Age all impact these studies..
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Old 01-02-2016, 04:35 PM   #19
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How to Compare Your Net Worth to Others (Without Being Rude) | FrugalFringe.com

Wow! So the article says that if you have $946,000 networth, you're in the top 90 percentile (richest 10%). That will be my networth when I exit my job late next year, yet it doesn't look enough

I suppose most people here are closer to the 95th percentile ($1.87M) or 92th - 93th percentile ($1.4 M - $1.6)

It seems like you have to be in the 93th - 95th percentile to safely FIRE.
Looks like only the richest 7% may be able to FIRE.
As others have said, it depends... Lifestyle, age, etc, etc.

I can't speak to moving between 90 and 95 percentile on what changes that may have on lifestyles but IMO, depending on what chart/graph/report you use, moving between the 95th and 99th percentile in net worth probably won't change your lifestyle too much. Now, the 99.9 percentile is some serious money. (To me anyway - I'll let you know if I get there - but don't hold your breath waiting for that post )
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Old 01-02-2016, 05:16 PM   #20
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How to Compare Your Net Worth to Others (Without Being Rude) | FrugalFringe.com

Wow! So the article says that if you have $946,000 networth, you're in the top 90 percentile (richest 10%). That will be my networth when I exit my job late next year, yet it doesn't look enough
If this article is accurate, I am solidly above the 95%, and yet the finances thing still worries me too. Even saving over $200K in 2015 doesn't make it seem like enough.

I guess it all in the mentality, not the actual numbers.
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