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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 02-09-2012, 08:31 AM   #41
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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.
OP asked us to use taxable income as opposed to AGI.
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Old 02-09-2012, 09:35 AM   #42
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Originally Posted by justplainbll View Post
OP asked us to use taxable income as opposed to AGI.
Oh. So in that case, 25.
In my case, it is only taxable once I take it 'over the wall' of the IRA
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Old 02-10-2012, 05:18 AM   #43
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We have 81 votes in the poll and more than 40 posts, so it would be interesting to see what conclusion nun has drawn from this.
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Old 02-10-2012, 06:39 AM   #44
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hrmmm - mine came in vey low, about 10 if I include present value for pensions. However, in the last 3 years we have taken out 2 mortages to get access to low interest rates. I hope to ride my 4.5% mortgage for the full 30 years (unless I can get a 4% one) and invest at a higher return than 4.5%. Maybe give me something to tell the great grand kids about.

Wonder if anyone else has done anything like this to take some of the cheap $$ ?
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Old 02-10-2012, 02:18 PM   #45
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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..
Agree. I was assuming for a 65 year old. Most people don't start their pensions until close to that. Mine starts this year when I turn 62. If you take your pension early it will usually be discounted so you end up in pretty well the same spot re capitalization.
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Old 02-10-2012, 02:20 PM   #46
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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.
What multiple did the pension get valued at?
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Old 02-10-2012, 02:21 PM   #47
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hrmmm - mine came in vey low, about 10 if I include present value for pensions. However, in the last 3 years we have taken out 2 mortages to get access to low interest rates. I hope to ride my 4.5% mortgage for the full 30 years (unless I can get a 4% one) and invest at a higher return than 4.5%. Maybe give me something to tell the great grand kids about.

Wonder if anyone else has done anything like this to take some of the cheap $$ ?
This would be the last thing I would do in retirement. Too risky for me.
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Old 02-10-2012, 02:39 PM   #48
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What multiple did the pension get valued at?
14.9
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Old 02-10-2012, 02:40 PM   #49
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This would be the last thing I would do in retirement. Too risky for me.
+1

There are many who support this strategy, Nords being one of the most outspoken proponents, but it is not something that even comes close to matching my investing style.
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Old 02-10-2012, 03:44 PM   #50
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Originally Posted by Danmar
What multiple did the pension get valued at?


Quote:
Originally Posted by Alan View Post
14.9
23 years of payments, discounted at 4%, would yield a multiple of 14.9; for 35 years a multiple of 18.7.
With a more conservative 3% discount rate a multiple of 14.9 represents ~20 years of payments and a multiple of 21.5 for 35 years of payments
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Old 02-10-2012, 03:59 PM   #51
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However, in the last 3 years we have taken out 2 mortages to get access to low interest rates. I hope to ride my 4.5% mortgage for the full 30 years (unless I can get a 4% one) and invest at a higher return than 4.5%. Maybe give me something to tell the great grand kids about.
You are my hero!

If I were as daring as I often pretended to be on this forum, I would remortgage my homes to get more money to go buy, buy, buy...

But wait a minute... I still have cash sloshing around that I am too afraid to throw into the ring.

And then, I am too lazy to do all that paperwork to get the mortgage. Does any bank even loan money to people with iffy or no income, even if they have a 7-figure portfolio worth several times the home? I remember some posters, I think JOHNNIE36, had that problem.
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Old 02-10-2012, 04:00 PM   #52
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Originally Posted by Danmar
What multiple did the pension get valued at?




23 years of payments, discounted at 4%, would yield a multiple of 14.9; for 35 years a multiple of 18.7.
With a more conservative 3% discount rate a multiple of 14.9 represents ~20 years of payments and a multiple of 21.5 for 35 years of payments
Thanks.

Prior to seeing the immediateannuity website I had always used a ballpark of 15 times my non-cola pension starting at age 55, and I'm sure I also got that ballpark multiplier from someone on this site. Plenty of knowledgeable folks here
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Old 02-11-2012, 09:12 AM   #53
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Thanks.

Prior to seeing the immediateannuity website I had always used a ballpark of 15 times my non-cola pension starting at age 55, and I'm sure I also got that ballpark multiplier from someone on this site. Plenty of knowledgeable folks here
Thanks. If you have a survivor benefit for a young spouse it might be more. How do you think income taxes should be factored into the multiplier?
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Old 02-11-2012, 07:51 PM   #54
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So if we are to receive SS of $X (annually) at age 62 in 3 years, do we show X25 plus total net worth/current income?

If so, then we're 36. (at 59)

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Old 02-11-2012, 10:25 PM   #55
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I hope to ride my 4.5% mortgage for the full 30 years (unless I can get a 4% one) and invest at a higher return than 4.5%. Maybe give me something to tell the great grand kids about.
Wonder if anyone else has done anything like this to take some of the cheap $$ ?
Quote:
Originally Posted by REWahoo View Post
+1
There are many who support this strategy, Nords being one of the most outspoken proponents, but it is not something that even comes close to matching my investing style.
We have a primary mortgage at 3.625% and a rental at 4.625%. Both 30-year fixed-rate loans. I hope to be debt-free in early 2041, just after my 80th birthday.

Covering a mortgage without losing your ass(ets).

We're investing it in a small-cap value stock ETF. I've been tracking the original experiment for over seven years now. So far not so good, but I have high hopes for the next 23 years. Those dividends have been getting re-invested at great share prices.

We have a military pension now, a second one coming in 2022, and enough savings to bridge the gap even if we were to pay off both loans. We do not invest in bonds for our retirement account, so over 90% of our investments are expected to have a long-term return higher than the mortgage rate. In other words, our income is mostly annuitized and more than enough for our beach-bum lifestyle. I would only recommend this approach for those who also have an annuitized income and a high tolerance for both short-term volatility and long-term risk.
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Old 02-11-2012, 11:03 PM   #56
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Thanks. If you have a survivor benefit for a young spouse it might be more. How do you think income taxes should be factored into the multiplier?
My pension is 100% taxable income and it is in addition to other income streams so I'm not sure how I would factor a tax liability estimate into a multiplier like that.

I don't normally count the absolute value of my pension towards my net worth except when prompted by questions like those posed by this thread.
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Old 02-11-2012, 11:11 PM   #57
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Old 02-12-2012, 03:07 AM   #58
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I don't see the value of the Net worth / taxable income calculation. What, if anything, does it tell you? If the intention is to estimate a worker's ability to retire, it doesn't make sense since the more you earn the lower the number.
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Old 02-12-2012, 03:48 AM   #59
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I meant my tax income / net worth = between 5% and 10%.
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Is your 5% and 10% the inverse of net worth divided by after tax income?
(I.E. after tax income / net worth)
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Old 02-12-2012, 03:51 AM   #60
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I agree. Our financial circumstances as a group are very different. I am not sure this calculation shows anything.
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I don't see the value of the Net worth / taxable income calculation. What, if anything, does it tell you? If the intention is to estimate a worker's ability to retire, it doesn't make sense since the more you earn the lower the number.
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