Networth Article says $946K NW at 90 percentile

[bclover]

One of my best friends has practically no net worth, yet lives very comfortably thanks to two excellent pensions and Social Security. He also has a large life insurance policy simply because he wants to leave something to his kids.

Net worth? For him it's completely irrelevant.

+100

That's my sister. Her and her husband both retired NYC police officers, then he got a job as head of security at a major NYC hospital and making a comfortable salary.
Always wanted a Manhattan condo so at 50 brought their dream condo on upper west side. Net worth I would say is probably not much if not negative.

Two city pensions plus retiree health care and a second salary and they are living extremely well. No kids, travel a bunch. lol tease my two sons that since they are their nearest relatives they better be nice if they want the condo when they die

This is all before Social security.

 

[jkern]

For me, Net Worth is just a number for fun. It is not the number used in the FIRE formula. I also include home equity in NW. The numbers I include for FIRE calculations are Expenses, Income streams, and Investable assets.

 

[Willers]

I've never understood where these types of calculators get their data. If I didn't have Quicken it would be easy to be off on my own net worth. It would take an awful lot of data mining to match accounts to individuals/couples/families, etc. to get to this. Income seems much easier, but net worth?

 

[palomalou]

The big question regarding net worth is that it SHOULD be measured by age group--that is, a sensible retiree/near retirement age should have many times the net worth of a 20-something just starting out.


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[rodi]

For me, Net Worth is just a number for fun. It is not the number used in the FIRE formula. I also include home equity in NW. The numbers I include for FIRE calculations are Expenses, Income streams, and Investable assets.

+1

My net worth is double my FIREcalc number. That's because I live in a ridiculously expensive real estate market. But I don't count my house except as plan B or C for long term care. My house is paid for, has reasonable taxes (thanks to Prop 13), is in an area I enjoy... It's not a hit to the budget - and I like living here. FWIW - my house is no great shakes... 50 year old tract home that would probably be a tear-down for a future buyer... but it's on expensive dirt.

 

[Danmar]

I really agree with you.. As we travel to resort towns-Aspen, Beaver Creek, Steamboat, Breckenridge (we live in CO)- all states have these areas with tons of multi-million dollar second (or third) homes.. There is so much wealth out there- and I really mean many, many with untold millions. That doesn't mean to say most aren't are just getting by- it just agrees that most don't tell their true worth.

Exactly, these surveys don't seem to access the truly wealthy. Our neighbourhood in Arizona is filled with 10,000 sq ft mansions worth several millions. These are second or third homes mostly. You can only imagine what their principle residences are worth. Granted, this would be a very small percentage of the population. Does tend to point out the bi-polar nature of wealth distribution.

 

[Danmar]

+1

My net worth is double my FIREcalc number. .

Same here. The other half is real estate and the capitalized value of my DB pension.

 

[Mulligan]

Same here. The other half is real estate and the capitalized value of my DB pension.

My net worth certainly could benefit from adding my pension since it was over $2 million when I checked at retirement. But that seems fake to me. I just treat my pension as my monthly paycheck from a job that takes no skill and I cant get fired from.


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[stepford]

My net worth certainly could benefit from adding my pension since it was over $2 million when I checked at retirement. But that seems fake to me. I just treat my pension as my monthly paycheck from a job that takes no skill and I cant get fired from.


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Does that mean that if I were to buy an immediate annuity for $2M my net worth would immediately drop by that amount?

 

[Mulligan]

Does that mean that if I were to buy an immediate annuity for $2M my net worth would immediately drop by that amount?

Im not qualified to answer that because it will be years if ever that I have a 2 million net worth. .... Maybe I suffer from "you don't miss what you never had". If me (just my opinion) you take the cash out value of the annuity if you want want to determine net worth then. That may be a big haircut. Of course annuitants are not worried about net worth, I assume them to be worried about cash flow.
Now, I have saved quite a bit of my pension the past 5 years and I count that money as part of my net worth.


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[karen1972]

I have no doubt they are accurate. Most people under 45 don't have pensions any longer (there are very few industries other than the public sector that haven't phased them out). People are not good about investing in their retirement until they actually need it, ie first comes their own student debt, cars, houses, marriage, kids, their kids college, their kids weddings and LASTLY oh yeh now need to save like crazy for retirement. The average income in America is $50k/household. Assuming a majority of that is needed to live on, so yeh, I wouldnt' expect more than $2-5k tops be saved away per year. Average home price is $200k, so even if you counted that in, it would just get you to the very low end of the range. In small town USA, you can find houses for $40k...for $80k, its actually pretty liveable. Granted health care, recreation, decent internet, decent schools, decent restaurants, shopping are all suspect.. but depends on what you think you need. I could move back to my home town and live off only SS if my house was paid off and many if not most do in that town. They may have $30-50k saved away for emergencies, but anyone with more than $100k is deemed "rich" by their standards.

 

[Bigdawg]

My net worth certainly could benefit from adding my pension since it was over $2 million when I checked at retirement. But that seems fake to me. I just treat my pension as my monthly paycheck from a job that takes no skill and I cant get fired from.


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+1. Just off the top of my head my net worth is way south of 1M. But, my monthly sit at home and do nothing and get sent money # is like 9K.

 

[Mulligan]

+1. Just off the top of my head my net worth is way south of 1M. But, my monthly sit at home and do nothing and get sent money # is like 9K.

And the beauty of it is we cant make any stupid stock trades to destroy it either!


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[rayinpenn]

Maybe I'm silly but I focus on whether we have enough to retire comfortably and about us being happy. What others have or don't have I don't care. It isn't us.

1. My in laws can buy $500k homes in Florida - I'm not sure I want to do that.
2. We drive three and five year old Toyotas and will likely keep them many more years. I don't need a BMW to let the world know "I have money - look at me."
3. My recipe for a good time: the sunshine pier, I two fishing rods, some bait, lawn chairs and a cooler. Oh and Blue skies would be nice.

How much do I need? Funny the nicest people are often of humble means.



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[Bigdawg]

from your TKR post I would say you might need to cut thru the ice to catch those fish. Might need to elevate that leg too. Hope all goes well rayinpenn. BTW, I love my 15 yr old chevy truck.

 

[Hermit]

...
It's correct that lots of elderly Americans have very little income other than SS:

For 65 percent of elderly beneficiaries, Social Security provides the majority of their cash income. For 36 percent of them, it provides 90 percent or more of their income. For 24 percent of them, it is the sole source of retirement income.[18]

Reliance on Social Security increases with age, as older people are less likely to work and more likely to have depleted their savings. Among those aged 80 or older, Social Security provides the majority of income for 76 percent of beneficiaries and nearly all of the income for 47 percent of beneficiaries

Policy Basics: Top Ten Facts about Social Security | Center on Budget and Policy Priorities

Most of the people who post here don't want to be in the group that gets most or all it's income from SS.

When I start collecting SS on my account at 70, it will be just above 50% of my income. The other portion will be my pension. Nothing close to poor for someone that is single having half their income from an upper level SS check. I'll be way past the 15% tax bracket and likely banking money every month.

 

[rayinpenn]

from your TKR post I would say you might need to cut thru the ice to catch those fish. Might need to elevate that leg too. Hope all goes well rayinpenn. BTW, I love my 15 yr old chevy truck.

Yeah I'm not on the sunshine bridge yet but, soon.


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[NW-Bound]

+1. Just off the top of my head my net worth is way south of 1M. But, my monthly sit at home and do nothing and get sent money # is like 9K.

Hey, $9K/month is certainly nothing to sneer at.

People without pension would have to run FIRECalc every which way, and many do not get anything like that.

 

[eta2020]

So a two income couple retires with each receiving $75k in cola guaranteed pensions, and $36K in SS benefits. They rent a luxury condo on the water, lease a $150K car, yet their net worth by definition is $0.

It must be hell to have zero net worth, yet have to survive on close to $20,000 per month in retirement income..

No your net worth is valued to amount of money that one needs to buy 2 COLA annuities that pay 75k a year (if it is COLA pension).

So it is astronomically high if you are 40....and it is pretty low if you are 90.

That is if you do not have anything else....

 

[Danmar]

Ignoring pension in your overall financial position(some people call this net worth) seems wrong. But net worth is really only for asset allocation decisions and bragging rights ( or feel good points). It really is cash flow that counts in retirement. Probably cash flow survey for retirees would be more interesting to me.

 

[rodi]

Ignoring pension in your overall financial position(some people call this net worth) seems wrong. But net worth is really only for asset allocation decisions and bragging rights ( or feel good points). It really is cash flow that counts in retirement. Probably cash flow survey for retirees would be more interesting to me.

Would you participate? Not to be impertinent - but you expressed reluctance to participate in the 2015 expenses discussion. I suppose it could be set to bands of income stream totals as an anonymous poll. But it would have to have rules to make it consistent...

 

[Danmar]

Would you participate? Not to be impertinent - but you expressed reluctance to participate in the 2015 expenses discussion. I suppose it could be set to bands of income stream totals as an anonymous poll. But it would have to have rules to make it consistent...

I won't expose myself by disclosing actual cash flow numbers but would vote in an anonymous poll. My pension is about half our cash flow and the other half is dividends. The problem in a poll will be cash flow generated by your portfolio. If you don't include WR , what about divs? Interest?

 

[rodi]

I set up the poll. To clarify (and I'll post there)... divs, cap gains, interest are all part of the nest egg - because you can reinvest them automatically and are part of your nest egg total return.

 

[LARS]

Ignoring pension in your overall financial position(some people call this net worth) seems wrong. But net worth is really only for asset allocation decisions and bragging rights ( or feel good points). It really is cash flow that counts in retirement. Probably cash flow survey for retirees would be more interesting to me.

While there is some truth in what you say I personally would rather have net worth wealth than pension wealth. As to it "really being cash flow that counts", that is also true, but you can spend down a net worth to create cash flow. Now, I will qualify my comments that it does depend how much net worth we're talking, but when measured in the millions it gives an awful lot of flexibility that a straight pension does not. Obviously with a pension you can try to replicate net worth through borrowing against the future stream, but that is terribly inefficient/costly.


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[Danmar]

While there is some truth in what you say I personally would rather have net worth wealth than pension wealth. As to it "really being cash flow that counts", that is also true, but you can spend down a net worth to create cash flow. Now, I will qualify my comments that it does depend how much net worth we're talking, but when measured in the millions it gives an awful lot of flexibility that a straight pension does not. Obviously with a pension you can try to replicate net worth through borrowing against the future stream, but that is terribly inefficient/costly.


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Rather have net worth wealth? Perhaps, but it's nice having some of each. I treat my pension as a FI proxy and can invest my whole portfolio in equities. The pension is a nice base which covers most of our base expenses. Most retirees should annuitize some of their net worth I think. Less risky.