how would you account for these assets?

[rodi]

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.

[ut2sua]

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.

[ER_Hopeful]

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.

[hpnutty]

Quote:

Originally Posted by CaliKid $44k $0k

+1

[rk911]

Quote:

Originally Posted by mrfeh 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.

[ncbill]

I wouldn't calculate either as an asset, I'd just add it to "amount available annually for discretionary spending."

[Markola]

Quote:

Originally Posted by ER_Hopeful 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 don’t help you much until you activate them.

[Nature Lover]

Quote:

Originally Posted by ER_Hopeful 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.