When Is A Retiree Considered Wealthy?

[tulak]

I use mark to market. To me that is reality. I don’t value my investments at what I paid for them, why should I do that for a house? We can see actual selling prices of homes around us. To extrapolate a per ft price is easy.

I use tax assessed value, which is lower than market value. Definitely a more conservative approach, but at least it increases yearly.

As for the video, the numbers feel about right to me.

 

[Koolau]

To repeat myself: I have enough.

I wish they had a category for "blessed."

 

[Andre1969]

He noted it was medians, and explained the difference between median and mean.

That might make more sense, because the more I think about it, I seem to recall the threshold to break into the top 10% is around $1M net worth. So, it would stand to reason then, that $1.9M would be the median, for those top 10 percenters.

 

[jldavid47]

Assets - liabilities = net worth.

Well, yes, that is the technical definition but is it useful? I calculate that and I also calculate our "financial net worth" which excludes our house, any mortgage/HELOC debt (currently zero) and personal property. Effectively, it is the sum the current value of all bank/brokerage/retirement accounts minus current credit card balances. I find this much more useful as we don't consider our home a source of cash (even though it technically can be).

I use mark to market. To me that is reality. I don’t value my investments at what I paid for them, why should I do that for a house? We can see actual selling prices of homes around us. To extrapolate a per ft price is easy.

I mark to market everything, but for our house I subtract 6% because that is the minimum we would probably pay in closing costs should we sell.

 

[ShokWaveRider]

To repeat myself: I have enough.

I wish they had a category for "blessed."

If they did it would not apply to us.

 

[jldavid47]

That might make more sense, because the more I think about it, I seem to recall the threshold to break into the top 10% is around $1M net worth. So, it would stand to reason then, that $1.9M would be the median, for those top 10 percenters.

The threshold for all people is about $1M. The top 10% threshold for retirees according to the table is $1.9M. The median top 10 percenter would be at the 95th percentile or $3.2M.

 

[jim584672]

If you watch WealthTrack with Consuelo Mac you are wealthy. Also you must get a print copy of the Wall Street Journal delivered.

 

[COcheesehead]

Of course, but (in your opinion) are things like annuities, pensions, SS, life ins, etc, included in assets? Rhetorical, NNTR

If they have a cash value, yes. If they are income streams, no. For planning purposes you can calculate a present value of these, but they shouldn’t be part of net worth.

 

[COcheesehead]

Well, yes, that is the technical definition but is it useful? I calculate that and I also calculate our "financial net worth" which excludes our house, any mortgage/HELOC debt (currently zero) and personal property. Effectively, it is the sum the current value of all bank/brokerage/retirement accounts minus current credit card balances. I find this much more useful as we don't consider our home a source of cash (even though it technically can be).


I mark to market everything, but for our house I subtract 6% because that is the minimum we would probably pay in closing costs should we sell.

I use net value for real estate as well though we sold our last house direct without a realtor on either side, only a title company.

 

[ShokWaveRider]

How does one calculate the real asset value of a home using the "Mark to Market" principle? I did not understand how to do it for a home when I read about Mark to Market.

 

[COcheesehead]

How does one calculate the real asset value of a home using the "Mark to Market" principle? I did not understand how to do it for a home when I read about Mark to Market.

Take the price of the most recent comp, divide selling price by square footage, take that number and multiple it by your square footage, subtract 6%. Should get you pretty close to mark to market value.

 

[ShokWaveRider]

Take the price of the most recent comp, divide selling price by square footage, take that number and multiple it by your square footage, subtract 6%. Should get you pretty close to mark to market value.

Thanks

 

[calmloki]

Exactly. However, lots of folks overestimate their assets and underestimate their liabilities. I can name 4 of our friends that do it. The home being a big one. We personally use what we paid, even though now it is worth double. I feel it is a more realistic approach. It is the only non financial asset we include in our calculation.

I tend toward wearing a small hat as well. Gotta say, our net worth took it's biggest jump ever when I went from using what we paid for our properties (mr. landlord here) to what the tax man says the "real market or true cash value" is. Still think we're undervaluing, but I'm good with that.

 

[Koolau]

If they did it would not apply to us.

I am sorry to hear that. Being blessed is better than being 1% IMHO. Naturally, YMMV.

 

[disneysteve]

We’re right at $3.2 M investable assets. This sure isn’t what I think of as wealthy.

 

[COcheesehead]

For the vast majority of Americans, $3.2m is a lot. For most of the world, $3.2m is a fortune. We need to step back sometimes and realize how fortunate we are.

 

[Dtail]

For the vast majority of Americans, $3.2m is a lot. For most of the world, $3.2m is a fortune. We need to step back sometimes and realize how fortunate we are.

Agree, plus with the natural LBYM philosophy of many members here even after retirement, who knows at what number they would feel wealthy?

 

[COcheesehead]

Agree, plus with the natural LBYM philosophy of many members here even after retirement, who knows at what number they would feel wealthy?

I agree. We’re on the upper end of the 95th percentile and we still use coupons and get excited over deals at Sam’s Club.

 

[Koolau]

We’re right at $3.2 M investable assets. This sure isn’t what I think of as wealthy.

Yeah, I know what you mean. We're not at that level, but close enough that the same questions go through my mind. I always say we have "enough", we are comfortable, we can do anything we want (but we can't do everything we want.)

We still look for value and reject purchases that don't seem to be worth the added cost (1st class airfare vs "coach plus" - which we do use.)

I think the "truly wealthy" would think nothing of flying private jet. We could certainly do our Midwest to Hawaii trip ONCE via private jet and not doom our FIRE plans. (For us it would be the Mother of all BTDs - where's RobbieB when we need him) But we couldn't do it every time. I DO think THAT distinguishes our situation from the "truly wealthy." YMMV

 

[Car-Guy]

For the vast majority of Americans, $3.2m is a lot. For most of the world, $3.2m is a fortune. We need to step back sometimes and realize how fortunate we are.

I can agree with you on that one.

 

[youbet]

I agree. We’re on the upper end of the 95th percentile and we still use coupons and get excited over deals at Sam’s Club.

The upper end of the 95th percentile would be in the low teens of millions! Nicely done COcheesehead!

 

[COcheesehead]

The upper end of the 95th percentile would be in the low teens of millions! Nicely done COcheesehead!

We’re solidly at 97-98%

 

[GenXguy]

So, according to this, doesn't matter if you are a couple or single, the dollars are the same. Makes no sense. As usual, these don't mean much at all.

I notice some of the responses are saying "we", but some of us are just "I".

 

[youbet]

So, according to this, doesn't matter if you are a couple or single, the dollars are the same. Makes no sense. As usual, these don't mean much at all.

Yeah, the single or couple issue pops up in these analyses all the time. When two unmarried folks living together report, each of their net worth amounts is stated separately. With a married couple, the two amounts are typically combined (if in fact the total amount can be separated into two parts at all).

The presented data in the presentation is really interesting, but would require some further refining to be really useful, especially in the low ranges.

 

[Dtail]

So, according to this, doesn't matter if you are a couple or single, the dollars are the same. Makes no sense. As usual, these don't mean much at all.

I notice some of the responses are saying "we", but some of us are just "I".

Yeah the household definition also gets a little unclear when a household has more than 2 family members who support themselves independently outside of sharing the house.
An example of the above could be 4 folks mid 20's in age who share a house and are worth a combined 1m.