Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 01-23-2020, 04:17 PM   #41
Moderator
rodi's Avatar
 
Join Date: Apr 2012
Location: San Diego
Posts: 13,520
Technically, both have value and should be accounted in some way for your net worth - if you are calculating the net worth for somereason.... I don't bother... that number doesn't mean anything to me since much of my networth by percentage is tied up in our house.

I have 2 very small pensions, non COLA, that I am collecting. I count the income from these pensions as income, non-COLA.

We have a granny flat on our property that generates rental income (offset by rental expenses)... This net income also gets counted as income for my planning/budgeting. I consider this to be COLAd, since rents go up in most markets. When we were using it to house my in-laws, there was no rental income. But it's bringing in good money now.

I count the *value* of the granny flat in our overall equity in our home since they are both on the same parcel and can't be subdivided/sold separately.

I don't count SS in our net worth - but I do count the income when generating budgets.

I find 'investable assets" a more useful number for determining things like withdrawal rates.

When I budget I look at all the income sources: net rent, pensions, hubby's SS, and withdrawals from savings/investments. I don't look at networth at all.
__________________
Retired June 2014. No longer an enginerd - now I'm just a nerd.
micro pensions 6%, rental income 20%
rodi is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 01-23-2020, 06:34 PM   #42
Recycles dryer sheets
 
Join Date: Dec 2007
Posts: 327
OP, I have rental income. I just list 50% of it as a "pension" in FIRECALC. I don't count the value of the rentals in my NW. I think this works out fine if your purpose if to find out if your numbers work out for RE. If you have the option to cash out your pension, then I guess you have the option to count that $ as part of your NW, just make sure that $ will not "grow" in any calculation assuming you don't have access to that amount today.
ut2sua is offline   Reply With Quote
Old 01-23-2020, 07:48 PM   #43
Recycles dryer sheets
 
Join Date: Sep 2007
Location: near L.A.
Posts: 262
maybe "magic number" is a better word than networth.

what I'm trying to get at is:
say my FIRE number is $1mil, my investments(taxable plus non-taxable) is at $920k. so if I include the 44k pension and say 100k for the studio (100k times 5% gives me about 5k of income, just a nice round number), then that would put me over $1mil and I've achieved FIRE.

Not that I'll quit my job tomorrow but just a nice feeling that i'm actually 144k closer than I thought.
ER_Hopeful is offline   Reply With Quote
Old 01-28-2020, 07:03 PM   #44
Recycles dryer sheets
hpnutty's Avatar
 
Join Date: Oct 2011
Location: Houston, TX
Posts: 61
Quote:
Originally Posted by CaliKid View Post
$44k
$0k
+1
hpnutty is offline   Reply With Quote
Old 01-28-2020, 07:13 PM   #45
Thinks s/he gets paid by the post
rk911's Avatar
 
Join Date: Dec 2018
Location: DuPage County IL
Posts: 2,114
Quote:
Originally Posted by mrfeh View Post
I'll never understand why people say this. If the pension is taken as a lump sum, then it is an asset, and is a component of net worth.

Until then, it is only a potential future income stream. If the holder dies, there is no value at all.
and looked at it that way then the OP's survivor's net worth is decreased by whatever is left in the 'account'. but i believe the OP indicated that upon death the balance is paid lump sum to his beneficiary.
__________________
Rich
Ham Radio, Sport Pilot, RVer
FIRE: 8/11/2005, age 55y,1d
Administrator for a regional 9-1-1 call center
rk911 is offline   Reply With Quote
Old 01-29-2020, 05:20 AM   #46
Thinks s/he gets paid by the post
 
Join Date: Jun 2017
Location: Western NC
Posts: 4,055
I wouldn't calculate either as an asset, I'd just add it to "amount available annually for discretionary spending."
ncbill is offline   Reply With Quote
Old 01-29-2020, 05:59 AM   #47
Thinks s/he gets paid by the post
Markola's Avatar
 
Join Date: Nov 2013
Location: Twin Cities
Posts: 3,473
Quote:
Originally Posted by ER_Hopeful View Post
maybe "magic number" is a better word than networth.



what I'm trying to get at is:

say my FIRE number is $1mil, my investments(taxable plus non-taxable) is at $920k. so if I include the 44k pension and say 100k for the studio (100k times 5% gives me about 5k of income, just a nice round number), then that would put me over $1mil and I've achieved FIRE.



Not that I'll quit my job tomorrow but just a nice feeling that i'm actually 144k closer than I thought.


By that logic, why not also calculate and include SS as if it was an annuity with a principal value? All of your home equity? It feels good to mentally add a couple million more to the net worth tally but those assets also donít help you much until you activate them.
Markola is offline   Reply With Quote
Old 01-29-2020, 10:25 AM   #48
Recycles dryer sheets
 
Join Date: Jan 2017
Location: Bay Area
Posts: 248
Quote:
Originally Posted by ER_Hopeful View Post
maybe "magic number" is a better word than networth.

what I'm trying to get at is:
say my FIRE number is $1mil, my investments(taxable plus non-taxable) is at $920k. so if I include the 44k pension and say 100k for the studio (100k times 5% gives me about 5k of income, just a nice round number), then that would put me over $1mil and I've achieved FIRE.

Not that I'll quit my job tomorrow but just a nice feeling that i'm actually 144k closer than I thought.
Skip all the NW discussion ----you want to know if how near you are to FI. For the pension, I'd include it (we're not preparing personal financial stmts). True that it's not that big a number overall....but for the calculation/goal you're pursuing, it's still relevant certainly. As for the rental, if you expect to continue renting in retirement, I'd consider recalculating your magic number reflect the expectation that you'll need less income from your investment portfolio.

I'm with others here that suggest you do it the way that works for you.
Nature Lover is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
What would you do if your assets grew to 8 figures? audreyh1 FIRE and Money 186 10-22-2017 12:13 AM
Escapist thread - If you lost half your assets what would you do? pullmyfinger Life after FIRE 74 04-28-2016 07:35 AM
Would you take this risk of maybe running out of assets? Lisa99 FIRE and Money 53 06-27-2014 06:11 AM
Why would some get a trust vs. giving away assets and claiming against the lifetime x rec FIRE and Money 15 11-11-2007 03:32 PM

» Quick Links

 
All times are GMT -6. The time now is 10:38 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2023, vBulletin Solutions, Inc.