Lifetime income vs. net worth

[doneat54]

FWIW, NW/IRS total earnings:


4 years ago when I retired: .64
Now: .96
If I add real estate holdings to my NW: 1.28

 

[jschner]

Not retired yet, the slow S&P500 method in a 401k wasn't working out too well, saving since 1988 and not coming close to my working wages. This is a good matrix to be able to see that. I figured I'll have to be working until 70 at the rate I was going so I the heck with it and went heavy on aggressive growth stocks the moment we went debt free in 2017. That has been a life changer. Guess I should consider retiring now turning 56 this year. Still haven't figured out the healthcare side of things yet. If I can get that figured out, it's time to pull the trigger.

Home not included:
2018 0.53
2020 1.22
Currently 1.80

 

[teetee]

I have been an 100% sp500 index investor but now I have ~30% in ETF. Right now my net worth (I don't own real estate) / gross income total since I started working 8 yrs ago is 1.18.

8 yrs later I hope the ratio will grow to be greater than 2.
But if there is a recession like the last one that decreases my portfolio by 70%, then the ratio will likely be something in 0.6.. still better than if I don't invest.

I may be ignorant but one shouldn't use this ratio value to determine when to retire right? The retirement spending is the deciding factor on the net worth needed to retire.

 

[Time2]

Did you use liquid net worth as numerator in your calculation?
Just checking.
Thanks.

Sorry target2019, I ran across this while looking for something else and I see I didn't respond.

Yes, I used liquid net worth as the numerator.
I may be pushing the term Liquid, I have a piece of land as an investment, not very liquid, but that is the only not easily liquid item. Only about 6% of my portfolio. Btw, as of 3-31-21 I'm at 1.38 times earnings.

 

[ArmchairMillionaire23]

IRS info finally posted on the MySocialSecurity site. Total savings and investments ÷ total taxed Social Security (or Medicare since they're the same amount for me) earnings = 1.04888 as of the end of 2020.


So I officially reached the level where my savings & investments have exceeded my total earnings at the age of 50. Hopefully all continues to go as planned until I retire in 2025.

End of 2021 update:

Ballpark estimate using pay stub info for 2021 makes my liquid net worth to total taxable income ratio equal to 1.122. So far, so good. Still moving in the right direction at least.