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View Poll Results: What's the ratio of your net worth to your taxable income
0 to 5 17 15.04%
6 to 10 16 14.16%
11 to 15 14 12.39%
16 to 20 16 14.16%
21 to 25 6 5.31%
Above 25 44 38.94%
Voters: 113. You may not vote on this poll

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Old 02-08-2012, 11:46 AM   #21
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About 15 if I didn't count the pension, 35 if I valued it around 25 times pension amount.
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Old 02-08-2012, 12:41 PM   #22
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Quote:
Originally Posted by REWahoo View Post
Aren't there too many variables to make this a meaningful poll?
What would be the point of a poll if it was meaningful? A ratio analysis where both the numerator and denominator contain vaguely defined components is my favorite!

Years ago, back in my pre-FIRE MegaCorp days, I used to make up ratio metrics to measure the performance of my department and set goals for my own performance evaluation and bonus. The more hard to understand variables, vague definitions and questionable measurement techniques the better!
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Old 02-08-2012, 12:54 PM   #23
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Originally Posted by REWahoo
Aren't there too many variables to make this a meaningful poll? Someone with a relatively low net worth (however measured) with a nice pension and SS can have a low ratio yet live very comfortably in retirement.
Yes, that is me. My ratio is about 1 (that would make for a helluva long retirement). My pension according to a calculator I ran has me around 25 with pension. Of course my way was unusual as I borrowed my way to ER, and have saved more in retirement than I did working.
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Old 02-08-2012, 01:04 PM   #24
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I voted, but I'm retired with no employment income, so it's not a meaningful number. GIGO...
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Old 02-08-2012, 01:14 PM   #25
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Not sure about the value of this survey as there are too many variables as mentioned earlier.

a) Not including my pension in net worth, the ratio is 22.6.

b) as a) but including the value of my pension in the net worth (if purchased as an annuity) then the ratio is 34.5


This will change year on year as dividends and cap gains vary.
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Old 02-08-2012, 03:39 PM   #26
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OK, I'll bite. My ratio is, say, one. What does that tell you?
a) I have woefully little networth.
b) I have high net worth and a job with even higher income.
c) I have high net worth and my tax-efficient-able income is incredibly high.
d) I have neither net worth nor taxable income (that is: networth=income, therefore networth/income=1=0/0).
e) There is meaning here no matter the origin of the numbers.

(Actual answer was "above 25"; after all I'm just one year into retirement; probably at my max - older people will be way above 25 around here)
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Old 02-08-2012, 03:41 PM   #27
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OK, I'll bite. My ratio is, say, one. What does that tell you?
a) I have woefully little networth.
b) I have high net worth and a job with even higher income.
c) I have high net worth and my tax-efficient-able income is incredibly high.
d) I have neither net worth nor taxable income (that is: networth=income, therefore networth/income=1=0/0).
e) There is meaning here no matter the origin of the numbers.
But who does most of the cooking at your house?
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Old 02-08-2012, 03:48 PM   #28
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But who does most of the cooking at your house?
Well, my husband was doing 100% but he got sick and I am now doing 100%.
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Old 02-08-2012, 03:56 PM   #29
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Quote:
Originally Posted by Tadpole View Post
OK, I'll bite. My ratio is, say, one. What does that tell you?
a) I have woefully little networth.
b) I have high net worth and a job with even higher income.
c) I have high net worth and my tax-efficient-able income is incredibly high.
d) I have neither net worth nor taxable income (that is: networth=income, therefore networth/income=1=0/0).
e) There is meaning here no matter the origin of the numbers.

(Actual answer was "above 25"; after all I'm just one year into retirement; probably at my max - older people will be way above 25 around here)
0/0 = 1?
Would seem odds are that with a ratio of 1and retired without a COLA'd pension and hoping to be around for another 20 - 30 years it's unlikely you'll be financially independent.
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Old 02-08-2012, 04:05 PM   #30
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Well, my husband was doing 100% but he got sick and I am now doing 100%.
Sorry, just realized I asked a question regarding the wrong poll.

Hope hubby is doing better.
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Old 02-08-2012, 04:35 PM   #31
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A very imprecise mechanism for capitalizing the value of a pension is to multiply the annual pension benefit by 20 to 30. In other words an annual pension of 25k could be considered to add 500 to 750k to a pension beneficiaries net worth.
Closer to 20 I would think unless you have a significant survivor benefit for a much younger spouse. If I capitalize our pensions at 25 times the multiple of pretax earnings to nestegg is about 25 times which means our SWR is close to 4%. Not sure what this means? Obviously very different once you retire versus the pre-retirement accumulaton phase?
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Old 02-08-2012, 04:50 PM   #32
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Closer to 20 I would think unless you have a significant survivor benefit for a much younger spouse. If I capitalize our pensions at 25 times the multiple of pretax earnings to nestegg is about 25 times which means our SWR is close to 4%. Not sure what this means? Obviously very different once you retire versus the pre-retirement accumulaton phase?
For those already receiving a pension, the remaining number of years of pension payments and the analysis / discount rate would seem to be the major factors determining where in the range of 20 to 30X the present value of the pension income stream lies..
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Old 02-08-2012, 06:15 PM   #33
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For those already receiving a pension, the remaining number of years of pension payments and the analysis / discount rate would seem to be the major factors determining where in the range of 20 to 30X the present value of the pension income stream lies..
I simply punched my existing pension numbers, including age etc into this free annuity estimator to get an equivalent lump sum for my pension.
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Old 02-08-2012, 06:23 PM   #34
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I simply punched my existing pension numbers, including age etc into this free annuity estimator to get an equivalent lump sum for my pension.
Without my pension conversion, our ratio was 8. With the conversion, our ratio is 25.
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Old 02-08-2012, 09:31 PM   #35
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Well our current ration is 10-12 , as soon as DH retires it would go upto 40-50 because we are LBYM (seriously) and we are going to cross into 40s this year so I guess the results depend on lots of factors :
* Age
* ER or Not

and some but all in all most people on this forum should be PAWs (Prodigious Accumulators of Wealth : As in "Millionaire Next Door")

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Old 02-08-2012, 09:48 PM   #36
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Net worth over taxable income?

Lemme see... Been counting my money with Quicken daily, so I know that amount (to the last dollar, not to the last penny as some people here do ). Add to that a conservative estimate for RE values...

Taxable income? Why, I just looked that up the other day to answer a thread posted by Ha.

And the ratio is ... 47.5!

Whoa! And my gross income in 2010 was a low 6 figure... Why didn't I feel rich?

Oh, let me see... Yes, there's this deduction and that deduction, which brought down the taxable income. And retired or not, I will still have to pay for those deductions, like health care, RE taxes, etc...

Yes, there's the reason I did not feel rich... I am relieved now...
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Old 02-08-2012, 11:32 PM   #37
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Ok I'll bite. Our current ratio is 3 and our FIRE year one ratio will be 6. BUT we have high income and save >60% so for us the ratio is meaningless.
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Old 02-09-2012, 02:02 AM   #38
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My ratio is between 5 and 10%, depending how I calculate my net worth (i.e. inclusion of pension or not).
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Old 02-09-2012, 05:17 AM   #39
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My ratio is between 5 and 10%, depending how I calculate my net worth (i.e. inclusion of pension or not).
Is your 5% and 10% the inverse of net worth divided by after tax income?
(I.E. after tax income / net worth)
If so, your ratios would be 20 and 10.
With 68 responses, the average ratios appear to be:
Mean == 17+
Median = 18
Mode == 25+
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Old 02-09-2012, 08:24 AM   #40
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Portfolio / AGI = 28 for me (no pension or SS)...must be something wrong w/ my math!!

My portfolio (most inside the IRA) does a LOT better but I'm only counting my what I withdraw to live on for the AGI calc.
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