Very small networth when ER ?

[Enuff2Eat]

The answer to this question means nothing when pensions are not taken into account.

Not everyone is fortunate enough to have a pension. Especially self employ people

 

[Nemo2]

Stopped working at the end of December 1988 aged 46 years and 3 months......had $500k Canadian, (no pension), and fixed income savings account rates were running up to 11 1/2% per annum.

Bought a spec house in B.C. with my late wife, did a huge amount of exterior (garden/landscaping) work ourselves, and paid for some interior additions.......sold it after eight years and cleared twice what we paid.

Currently have slightly over 370% of what I had when I stopped working, ( a couple hundred k of that came with DW).

With the standard Canadian government pensions, (similar to SS, plus DW qualifies for the age segment in 10 months), we do pretty well....a little travel once in a while...(sometimes twice in a while)..no complaints....(especially since I didn't start 'really' working until I was about thirty).

Oh, and our projected expenditure for 2016 is ~ $37,000 Canadian, ($28,000 US).

 

[ChiliPepr]

Not everyone is fortunate enough to have a pension. Especially self employ people

I believe that is what Meadbh meant.... someone with a COLA pension of $60k with health insurance and $300k in an IRA is probably better off than someone with $1.5 million in the bank.

 

[Enuff2Eat]

I believe that is what Meadbh meant.... someone with a COLA pension of $60k with health insurance and $300k in an IRA is probably better off than someone with $1.5 million in the bank.

You made a lot of sense. My neighbor retired at 52... according to him. he has very little of saving except of his house is paid for and $51k/year pension. He probably feels alot more secure than a person with 1.5 million for sure. (he was a fireman).

he recently told that his wife retire too and they survive only his pension. Nice.

 

[Enuff2Eat]

I think you may be right. You made a good (if risky) decision to go into law enforcement, just as I did in the military. Fortunately, we both avoided early death and were able to receive the promised retirement packages. But we're a tiny minority.

One thing is for sure: Fifty years from now things will be very different.

In so many way, a guarantee nice pension is better than a large net worth.

 

[NW-Bound]

I agree. The era of pensions will be a blip in history and it will go back to the way it was - multiple generations living in the same house or sharing with roommates.

In order to live with the younger generations, you need to have offsprings.

Well, I guess a geezer can get adopted by a family. Else, roommates it is.

 

[travelover]

In order to live with the younger generations, you need to have offsprings.

Well, I guess a geezer can get adopted by a family. Else, roommates it is.

When I was a kid, my elderly neighbor did this. He essentially gave a family his home as long as they cared for him until he died, which they did. They all lived together, then sold the house after he died.

 

[Luck_Club]

less than or equal to $100k
less than or equal to $250k

less than or equal to $1/2 million
less than or equal to $600k
less than or equal to $750k
less than or equal to $800k
less than or equal to $1 million
less than or equal to $1.5 million
less than or equal to $2 million
more than $2million

enuff

I think everyone is hinting around it, but it still depends.


A person with a $2 million Net worth and no health care is most likely worse off than someone with $0 Net worth but has a $60K govt pension and healthcare coverage.

What is probably more pertinent is "What was your available Cash Flow, when you retired?" You could further parse that down to after tax, after Health care, after mortgage, etc. The cash flow number you need will vary, but should be slightly less than your working cash flow number. Especially since you won't be stashing away as much of your cash flow for later in life anymore. For many that can cut the cash flow requirement in half!

Cash Flow is king. If you have more coming in then going out no worries. Less input than output is a world of anxiety and depression.

 

[NW-Bound]

When I was a kid, my elderly neighbor did this. He essentially gave a family his home as long as they cared for him until he died, which they did. They all lived together, then sold the house after he died.

Did they have to care for him very long?

 

[FUEGO]

In so many way, a guarantee nice pension is better than a large net worth.

Yeah, I'd probably take that $55k per year police pension plus health/dental, few hundred thousand in the bank, and a paid off home. That would allow us to spend about $10-15k more than right now.

Though I kind of like watching my portfolio go up since it might allow higher spending in the future (it's going to take a while before we can spend $55k though!)

 

[travelover]

Did they have to care for him very long?

As I recall, it was about 10 years.

 

[Sunset]

Net worth is such an overused term. Should be investible assets plus some factor equated to you pension. Housing should be excluded unless you tapped it as a source of income. Instead of net worth it always comes back to income needed to cover said expenses and the various means to derive that income.

Even housing should be included when owned, as it saves the cost of rent minus the taxes, insurance, repairs.
So include the house "pseudo monthly income value" like a small pension.

I do like the idea of rather than net worth, to convert everything to yearly pension or income value a better comparison method.

 

[Totoro]

I'm in the sub-million camp, and consider myself FI. I have modest wants and am single. No pension, but socialized healthcare (Europe) and maybe a modest inheritance somewhere in the next 40 years.

Against better judgment (?) though I'm trying to build up my second company, mostly because I want to. So far it has only cost me money, and it will likely stay that way for a few more quarters. If that fails, I'm done with that and will optimize for independence further.

That would likely entail being an independent consulting for a few months a year. Or even join a startup (as employee).

Why do this? Because I like the intellectual challenge, want to find out if would enjoy building up a company, am nervous about the financial horizon (being mid thirties) and would like a slightly different lifestyle in the end which I currently cannot afford with worry: living on two continents. That would take somewhere north of 1.5 - 2 million (it includes a small airplane).

So a mix of ego, financial worry, lifestyle inflation and ambition ..

 

[scrabbler1]

Because I ERed at such a young age (45) 8 years ago, I needed to have a good chunk of my portfolio in non-retirement accounts so I could safely get from that age to age ~60 when the first of what I call "reinforcements" kicks in. Those reinforcements are unfettered access to my tIRA, my frozen company pension (only $1,200 a month, when I turn 65), and SS.


Before I ERed, I had about 2/3 of my $840k portfolio in pretax accounts and 1/3 in after-tax accounts, I had to reverse that ratio so I'd have enough to live on for 15 years until the reinforcements arrive. Half of that pretax portfolio (or 1/3 of the overall portfolio) was in company stock which I was able to liquidate relatively cheaply by using the NUA option to reduce the tax bite. Thanks to the crashing markets in late 2008, I was able to buy 25% more shares of a big bond fund at bargain-basement prices which has helped my monthly dividend income.


Despite pulling nearly $25k from the portfolio every year, it has still grown from $840k in late 2008 to $1.4M today.


I am just more than half way to getting to age ~60 intact since I ERed so things are looking good!

 

[NW-Bound]

As I recall, it was about 10 years.

I was making a facetious comment about the family having a conflict of interest with the man's longevity.

If honest people can be found, it would be a better deal than signing over one's assets to a nursing home. Still, it requires that one has some assets, and is not barehanded.

 

[COcheesehead]

My Dad retired with a net worth of about $50,000, but he had a union pension and SS and lived for nearly 28 years without touching the nest egg. His net worth all but disappeared in the last few months of his life once he had to be put into a care facility.

 

[skipro33]

Hmmm... net worth... retired 4 years ago;
Well, my pension is a bit over $5,000 a month with a 5% COLA based on the usual tables.
Health care is covered. I pay about $50 a month plus the usual co-pays for visits and prescriptions.
My 401K, 457, IRA's, checking, savings and wallet all adds up to $400,000 of which I have been withdrawing 4% ($1,300 monthly) for the past 4 years when it only added up to $375,000.
I start drawing Social Security at age 62 in 2 years for what will be a total of $2,500 a month for DW and I. At which time I probably won't withdraw the $1,300 from my savings/investments. That pot of money will be for long term health care needs, emergencies, grand kids college, etc.

I own my own home worth approx $800,000 and other personal property worth maybe $300,000.

 

[jkern]

Before I ERed, I had about 2/3 of my $840k portfolio in pretax accounts and 1/3 in after-tax accounts, I had to reverse that ratio so I'd have enough to live on for 15 years until the reinforcements arrive. Half of that pretax portfolio (or 1/3 of the overall portfolio) was in company stock which I was able to liquidate relatively cheaply by using the NUA option to reduce the tax bite. Thanks to the crashing markets in late 2008, I was able to buy 25% more shares of a big bond fund at bargain-basement prices which has helped my monthly dividend income.


Despite pulling nearly $25k from the portfolio every year, it has still grown from $840k in late 2008 to $1.4M today.


I am just more than half way to getting to age ~60 intact since I ERed so things are looking good!

My situation was very similar. Retired 6/09 age 51 with $900k portfolio, about 2/3 after tax. Spent $100k remodeling/upgrading home. Spent $300k on rental properties. Now worth about $1.6M (IRA, Cash, Rentals). I have less than 6 months before I have access to the IRA.

 

[marko]

Let's remember that a guaranteed $60K COLA'd pension is equivalent to $1.5 million portfolio.

 

[NW-Bound]

Let's remember that a guaranteed $60K COLA'd pension is equivalent to $1.5 million portfolio.

... in terms of cash flow. When you and your spouse die, the pension stops, but the portfolio lives on for your heirs.

 

[exnavynuke]

... in terms of cash flow. When you and your spouse die, the pension stops, but the portfolio lives on for your heirs.

Which is nice, for people that have heirs they want to leave their money to. If that's not a priority/desire, then the difference is fairly immaterial imo.

 

[NW-Bound]

Very true.

Another difference between having your own stash and a steady income is that the former gives you more flexibility. For example, you can spend a lot one year, then make up for it later. With a steady income, you have to save first before you can splurge. Of course most people have some savings outside of their pension too.

This freedom in managing your assets of course comes in exchange for the occasional stomach ache when the market turns south. But as I am used to it, it is no longer a problem.

 

[Beardog]

As a self-employed person, I have no concept of how awesome it must feel to have an approximately $60K per year COLA pension and health care paid for in retirement. In my mind, I have to save/compound $2.5 million of my hard earned money to come close to the same "guaranteed" retirement benefits. I would take a few hundred thousand bucks in my pocket and the defined benefit pension/health insurance in a heartbeat. For current and near retirees, what a great deal! For future retirees, and perhaps very young current retirees with long anticipated lifespans, it looks like the great defined benefits may soon become shaky ground upon which to plan the future.

 

[ExFlyBoy5]

Yeah, I'd probably take that $55k per year police pension plus health/dental, few hundred thousand in the bank, and a paid off home. That would allow us to spend about $10-15k more than right now.

I was fortunate to hang around the Air Force long enough to get a pension; it's a HUGE reason I was able to retire so young. But, there were sacrifices over a period of 22 years to bring this to fruition but those sacrifices (mine, specifically) pale in comparison to what others had to do to earn (as opposed to GET) the monthly "wake up pay".

As far as I am concerned, there is NO way I would want to be in law enforcement for 2 days, let alone 20+ years to "get" that pension. Here in Georgia, there have been 6 officers shot in the line of duty over the last week. That is a risk that is simply too great for me to accept..so that pension is HARD EARNED. Not only to mention, the police pension of today is much different than the pension of 10 years ago.

As a self-employed person, I have no concept of how awesome it must feel to have an approximately $60K per year COLA pension and health care paid for in retirement.

Not to beat a dead horse, but for a lot of folks (military/police/fire) this comes at a HUGE cost. Missed holidays. Missed birthdays. Missed anniversaries. Missed special occasions. Debilitating injuries at a young age. Shorter life span. Point being, this isn't a "free" benefit...it is a decent return of investment that can have a VERY steep initial cost. Just saying.

 

[Beardog]

Yeah, I'm with you, ExFlyBoy5. I don't begrudge anything that comes as future reimbursement/payment/benefit to all who put themselves in harm's way for their fellow citizens. I think its great. I just don't see how it can all last indefinitely. Military, police, and firefighter benefits should be untouchable, IMHO.