Networth Article says $946K NW at 90 percentile

[eta2020]

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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And you can pass your net worth wealth down to your kids not so with your pension wealth.

You are free to buy pension wealth via Immediate Fixed Annuity if you desire to convert some of your net worth wealth into pension wealth.

 

[LARS]

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.

Yes, all else being equal I would personally prefer net worth (again assuming larger numbers). Clearly, both would be better!

As to annuities, as many have said in the past, that is exactly the reason to delay SS to at a minimum full retirement (if indeed not waiting to 70).

Indeed, with SS, especially waiting for larger payout, an individual has the ability to have a "pension" and net worth.



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[Katsmeow]

Of course, your home equity is part of your net worth. It is an asset. But, in terms of withdrawal rate, I don't consider it part of my investment portfolio. But, I could sell it and get money from it. And, if I so chose, I could buy another house (or condo or whatever) for less money or could rent.

As for the idea that people can't retire with a paltry $946,000 net worth, that depends on various factors. For the 40 year old retiree with no other source of income then that might indeed be the case.

But, for many people -- even without a pension -- it is unnecessary. I haven't taken SS yet but will be eligible soon. Between my husband and I, if I did take SS at 62, we would have about $47k in come just from SS, totally apart from any withdrawals from our portfolio. I assure you that many, many people happily live on $47k during retirement. And add in some withdrawals from the $946,000 portfolio and people could be perfectly content during retirement.

 

[Danmar]

And you can pass your net worth wealth down to your kids not so with your pension wealth.

You are free to buy pension wealth via Immediate Fixed Annuity if you desire to convert some of your net worth wealth into pension wealth.

Agree. Our portfolio would be plenty to pass down. Our pensions were something that just kind of happened and are very generous. Very low contributions on my part. I figure I have already received all my contributions back and I am only 65. Really lucky to have such a pension.

 

[Debinnov a]

I totally have pension envy....lol We are retired almost two years, in our 50's with a long wait for full SS. We have one small rental property and are living off of that income and our nest egg. Hard to adjust from accumulation to withdrawal, but getting used to it. SWR should be around or just under 2% hopefully once both take SS. I just feel I would sleep better with a pension.

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[Teacher Terry]

My hubby and I each have a small pension of $20,000/year and I feel secure knowing that. It's the main reason we worked in the public sector for less $ then we could have earned in our professions in the private sector. WE also get raises every year starting with year 4.

 

[kcowan]

Very low contributions on my part. I figure I have already received all my contributions back and I am only 65. Really lucky to have such a pension.

Ours was totally non-contributory (other than giving up other contribution room). My Ex and I get half each. Although it is not COLAd, inflation has been very low in the last 20+ years we have received it when compared to the previous 20. And the markets have largely cooperated.

So yes, we are very lucky as well.

(I wonder how many people consider their luck when evaluating their financial performance?)