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Very small networth when ER ?
Old 12-18-2016, 06:47 AM   #81
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Very small networth when ER ?

I cheated because our retirement system runs an analysis including the COLA. It's set at 3% compounded annually, which means by year 14, my COLA rate is 51%, 1/2 my base pay and at 23 years, with the COLA, my base pay actual doubles. Another reason to retire early and get this compounding factor working for me. It's crazy, but I'm sure not arguing. My job is to live a long life!!
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Old 12-18-2016, 06:54 AM   #82
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2017ish, how are you liking TN and what area are you in?
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Old 12-18-2016, 10:57 AM   #83
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2017ish, how are you liking TN and what area are you in?
Nashville (since 2004)--not retired yet, but we'll be staying here. Currently have house with land in growing area; plan to move into smaller place in heart of city whenever we get bought out. Will enjoy doing concerts/bars/restaurants etc. without 30 minute drive home.

Very different from East Tennessee, which we plan to see and experience more of in the future.
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Old 12-18-2016, 03:25 PM   #84
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Old 12-18-2016, 04:31 PM   #85
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Not to beat a dead horse, but for a lot of folks (military/police/fire) this comes at a HUGE cost. Missed holidays. Missed birthdays. Missed anniversaries. Missed special occasions. Debilitating injuries at a young age. Shorter life span. Point being, this isn't a "free" benefit...it is a decent return of investment that can have a VERY steep initial cost. Just saying.
I don't begrudge anyone their earned pension, in fact, it is a little envious reading about it in some of these posts. I always felt that it was, as mentioned in another post, part of the salary as it seems that job(s) that are the same as mine in a different sector is paid a lower bases salary but a pension is earned. Sometimes it is hard to see the future benefit of said pension when you are just starting out. Just like my kids said when I made them start their ROTH Ira at 16 with their first job, "65 is so far away!!"

Having said that, my current non pension job has the lovely disadvantages of the bolded above.
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Old 12-18-2016, 06:50 PM   #86
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WE each have a 20k pension with cola. However, our health insurance is very expensive at 10k/year. We also have savings and a lot of equity in our home. WE made lower wages to work in government for the pensions and it was a good trade off.
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Old 12-19-2016, 01:56 PM   #87
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As I stated there are many different definitions of what makes up a Net Worth. I have heard even professionals say you shouldn't add in your value of your house. When it comes to pensions it can be a struggle to determine what the net worth is even though their are pretty simple formulas that can estimate what your pension value would look like as a net worth.

Personally is our case if you looked at what kind of retirement account balance you would need to get a 4% SWR to equal our pensions, it would be valued at around 2.5 million, but that is not universally agreed upon as a legit value by others.

It works for me and I believe you were correct in what you wrote as well, from my perspective.
More for fun than anytihng else, I track two net worths - a retirement net worth which is savings I will be able to use in retirement plus the net present value of my pensioin.

The second net worth is "all in". Retirement savings, net present value of pension, house value, college savings, HSA, etc.

Dont include social security in either calc.

For net present value of my pension, I use one of the annuity calculators on the web. For a lot of them, you have to input a $ amount, and it will tell you the monthly payment, so it is a bit bassackwards, but you can get an idea that way.
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Old 12-19-2016, 03:50 PM   #88
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More for fun than anytihng else, I track two net worths - a retirement net worth which is savings I will be able to use in retirement plus the net present value of my pensioin.

The second net worth is "all in". Retirement savings, net present value of pension, house value, college savings, HSA, etc.

Dont include social security in either calc.

For net present value of my pension, I use one of the annuity calculators on the web. For a lot of them, you have to input a $ amount, and it will tell you the monthly payment, so it is a bit bassackwards, but you can get an idea that way.
What rate do you use when calculating NPV for your pension?
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Old 12-19-2016, 04:03 PM   #89
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A properly funded pension plan should not depend on ongoing contributions. It should operate just like your 401(k), except is takes advantage of the fact that some retirees will die young, leaving money to cover those that obstinately continue to live past their due date.
But instead of using reasonable projected investment return rates like we do, don't they use 7 to 8% nominal rate of return? Some used to use an even higher number, like 9%.

For example, CalPERS, the big California Pension Fund, uses a projection of 7.75% nominal return against a 3% inflation. That 4.75% real return seems easy but has not been achieved in the last 20 years.
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Old 12-19-2016, 06:01 PM   #90
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But instead of using reasonable projected investment return rates like we do, don't they use 7 to 8% nominal rate of return? Some used to use an even higher number, like 9%.

For example, CalPERS, the big California Pension Fund, uses a projection of 7.75% nominal return against a 3% inflation. That 4.75% real return seems easy but has not been achieved in the last 20 years.
Yes, and shame on them. Where is the line between incompetence and criminality?
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Old 12-19-2016, 07:28 PM   #91
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Well, this is off topic but as I started this side discussion, please allow me to finish it.

The projection of 7.75% nominal return over 3% inflation was quoted from an article that was critical of CalPERS's actual performance of only 7% over the last 20 years. So, I went to CalPERS Web site, and they confirmed that 7% number.

But, but, but the inflation has been below 3% in recent years. So, I looked that up and the cumulative inflation in the last 20 years, when annualized, worked out to only 2.15%/year.

So, the real return is 7%-2.15% = 4.85% against the 4.75% projection. What is the problem then?

Perhaps it is one of those bad sequences of return (the return is not the same every year). An individual can do variable withdrawal during lean years, but that's not an option for a pension fund. There might be some other factors that one needs to dig down to comprehend. Even the Federal government underestimates the cost of many social programs, so this is not uncommon.

And by the way, I found that the current projected return is "only" 7.5% instead of the old 7.75%. This also caused an outcry that it was still not realistic. The pension consultant firm has recently suggested that 6.2% is a better number for future returns (no mention of the inflation number).

CalPERS funded ratio is now about 73%.
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Old 12-20-2016, 11:40 AM   #92
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Parents retired at FRA with only SS at $1200/mo combined. Their house was worth about $200k with a $40k mortgage, which would be a net worth of $160k. Given that they were too young to reverse mortgage at an acceptable payout rate, it generates no income. (Thus I would argue that one should talk about investible assets instead of net worth.) Although they live in a LCOL area, $1200/mo doesn't cover their expenses. Their retirement is SS supplemented by a monthly allowance from their children. Big ticket expenses (car, roof, deck replacement) are also covered by the kids.
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Old 12-20-2016, 11:59 AM   #93
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.....
Not to beat a dead horse, but for a lot of folks (military/police/fire) this comes at a HUGE cost. Missed holidays. Missed birthdays. Missed anniversaries. Missed special occasions. ........ Point being, this isn't a "free" benefit...it is a decent return of investment that can have a VERY steep initial cost. Just saying.
there are a lot of folks who also work and miss holidays, birthdays, anniversaries due to work and they don't even get a pension, many have to work even when sick as there is no pay for no work.

Not trying to take away anything from others, just pointing out it's not all bad, and some have it worse or just as bad.
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Old 12-20-2016, 02:04 PM   #94
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there are a lot of folks who also work and miss holidays, birthdays, anniversaries due to work and they don't even get a pension, many have to work even when sick as there is no pay for no work.

Not trying to take away anything from others, just pointing out it's not all bad, and some have it worse or just as bad.
We all have free will. Make our beds then sleep in them. Spent one Christmas on barracks duty, one in Okinawa, one in Somalia and one in Sadr City. All my choice. I willingly did that knowing that I would rate a pension after 20 yrs. We can all take steps to change our situations and futures. After hours education/training, start your own business, learn a new skill, apply for a different job, get a second job, marry rich, save-invest-ER, etc...

Good luck.
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Old 12-20-2016, 03:09 PM   #95
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Hmmy, can the kids afford to help or is this a burden to you guys? If it is they could sell the house and live off the profits and then go into low income senior housing once their $ is gone.
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Old 12-20-2016, 03:23 PM   #96
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Hmmy, can the kids afford to help or is this a burden to you guys? If it is they could sell the house and live off the profits and then go into low income senior housing once their $ is gone.
I have been contributing nearly 30 yrs (they ran into financial troubles long before they retired), but we each contribute based on our ability and willingness. I used to consider it a burden, but now I just accept its part of my annual expenses to FIRE.
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Old 12-21-2016, 02:14 AM   #97
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...CalPERS funded ratio is now about 73%.
A correction is in order. The 73% number above is outdated. The current ratio is 65%. This means the pension fund has only 65c for every dollar it needs to meet the promised benefits.
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Old 12-21-2016, 06:50 AM   #98
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No such thing as "too young" to retire. If you have enough money then you can retire. I would have retired at 18 if I could. I'd retire tomorrow at age 37 if I could afford it.
When I was a Section 8 landlord, all my tenants were retired at age 18... Better healthcare, decent housing, free transportation and free legal. Even free Christmas presents.

The only disadvantage was choice.
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Old 12-21-2016, 07:32 AM   #99
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It seems like lots of folks here retire early with a massive of net worth. I like to see if anyone actually pull the trigger with a small networth.

would you share your networth (asset) and age when you pull the trigger?
Retired at 56. DGF at 44. Probably could (or should) have done it sooner. Well over $3M. I came from a very humble, single parent beginning, sometimes I cannot even believe it is real. I have way more than I need, but I am ramping up my spending.

DescriptionAnnualMonthly
Non-COLA Pension at age 65$15,144$1,262
VA Disability$1,598$133
SS at 70 ($1,698 at 62)$36,060$3,005
Rental income ~$330K gross, ~$165K net$165,000$13,750
Total $18,150
   
Assets  
Investable assets$1,300,000 
Rental equity$1,700,000 
Residence equity$250,000 
DGF assets$600,000 
Total$3,850,000 

Free VA Healthcare for me. Free MinnesotaCare for the DGF.

DGF of 26 years a small pension and SS coming in 10+ years.
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Old 12-21-2016, 08:03 AM   #100
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We all have free will. Make our beds then sleep in them. Spent one Christmas on barracks duty, one in Okinawa, one in Somalia and one in Sadr City. All my choice. I willingly did that knowing that I would rate a pension after 20 yrs. We can all take steps to change our situations and futures. After hours education/training, start your own business, learn a new skill, apply for a different job, get a second job, marry rich, save-invest-ER, etc...

Good luck.
Gotta go with Bigdawg on this. We all make our choices and then have to live with them. Other person envy for what they receive for the choices they made in life seems to make a somewhat common appearance on ER.

Way back in the last century when I was 17 I decided to take Army ROTC as a college freshman, basically to just see what it was all about. This was at the height of the VN war and all my friends thought I was insane. But my dad, who had been an island hopper in the Pacific during WWII, told me that, if I was going to be drafted, I would be far better off becoming an officer than an enlisted man like he had been (drafted in Feb, 1942, discharged in Dec 1945). The thought of a pension for me at 17 was like thinking we would have cell phones or the internet. Wasn't on the radar.

Anyway, despite sometimes being sent to places I didn't want to go to to do things I didn't really want to do, it all worked out. And I wouldn't trade it for anything. And any benefits I earned - I earned. Now I have friends who say, wow, you get a guaranteed pension, SS, TFL, commissary/PX, etc. Why shouldn't we get the something like that? Simple - the military now, and then, is pretty liberal about who they will accept. A HS diploma (and that can be waived), general good health, no criminal record and a desire to serve are the way in. And I doubt that few, if any, of the young folks volunteering these days have any clue what they would receive 20 or 30 years from now.

I don't begrudge anyone their successes. I have friends from college who became hedge fund managers and retired in their 40s with more money than most of us can imagine ever earning. A few Drs, lawyers, etc., who have had similar successes, but most of them are still working and I'm retired. They either really like their jobs or have a lot of ex wives .

To sum it up, those of us, whether, military, LEO, teachers, firemen or any federal, state or local employee, who receive pensions, annuities, etc., earned them. What happens with these retirement systems in the future is unknown, but they will slowly disappear. These were our choices, what you did was your choice. Pension envy is an ugly burden to bear .

Some of this was written satirically, some was not. But the topic never seems to get old around here.
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