When Is A Retiree Considered Wealthy?

[Out of Steam]

Shhhh. If you tell everyone that, then they'll all retire and traffic and restaurants will suck on the weekdays too.

The ability to do things during the day on weekdays is a huge lifestyle improvement.

 

[PandaBear]

That's fine, but by that logic anyone who purchases a traditional annuity* in a lump sum from their assets immediately sees a drop in their net worth equivalent to the amount "invested" in the annuity. Maybe annuities/pensions/Social Security are not technically part of one's net worth but the all have a net present value that acts like an asset.

(*Yes, I know there are types of annuities where there may be a payout to beneficiaries at the end.)

I know I don’t consider our pensions and social security as part of our net worth. However, they are a big part of our retirement assets.

The same with our home. It’s part of our net worth, but not part of our retirement planning.

The same with our LTC policy. It’s not part of our retirement assets or net worth (it’s actually a liability as it costs us $2000 per year) but if we ever need it, it becomes a retirement asset as it will pay us $6000 per month for as long as we qualify.

I think part of the issue is there is not consistency in how people describe assets and benefits.

 

[COcheesehead]

The numbers are in comparison to other people. So if you don’t think $3.2m is rich. Ask how the other 95% of the folks feel.

 

[TheWizard]

Totally agree, Net Worth may not matter much if the monthly cash flow is taken care of by Pensions + SS & other sources of income.

I was going to say something like this.
If you have a hefty retirement income separate from (unneeded) portfolio withdrawals, then you can be a decently wealthy retiree.

Of course that's not saying you can afford a yacht and a Bentley...

 

[COcheesehead]

Some cash flows end so no legacy component to them. There may also come a time when you can’t accelerate income flow to cover needed expenses like LTC, medical issues, a new house, car, etc. So having other substantial assets does have value.

 

[Koolau]

I know I don’t consider our pensions and social security as part of our net worth. However, they are a big part of our retirement assets.

The same with our home. It’s part of our net worth, but not part of our retirement planning.

The same with our LTC policy. It’s not part of our retirement assets or net worth (it’s actually a liability as it costs us $2000 per year) but if we ever need it, it becomes a retirement asset as it will pay us $6000 per month for as long as we qualify.

I think part of the issue is there is not consistency in how people describe assets and benefits.

True, it gets complicated. I simply ignore it in a NW calculation if I can't go get it (in cash, check, promise, etc. or else some way "value" it - like a house.)

 

[scrabbler1]

I have flown private jets on someone else's dime a few times - and gotta say, it is sweet to get where you need to go in comfort while everyone else is stuck back at the departure gate (more often than not I'm the one still stuck at the departure gate).

I flew in a corporate jet twice back in 1992. My mom was ill with cancer and had to fly from NY to Houston for treatment. The Corporate Angels Network linked up ill patients with companies which had corporate jets. The companies got to write off the trips as charity, and we got free rides. One time, the jet was deadheading from Houston to NY, so we were the only passengers on the plane. The next time, there were some employees on the plane with us. The company also drove us to the off-airport rental car office, saving us the 10% shuttle bus surcharge.

Those planes were great. It was like putting your living room on a plane, with all the big, comfy seats and a sofa to sleep on. The flights don't use main passenger terminals, only their private hangars or, in the case of JFK, the old Aviation building (now a police department building).

 

[sparky08]

We live on a small pontoon boat lake. I was doing yard work in the backyard and I overheard someone in a pontoon boat say to their boat mates “ Look- they gave a gardener”

I do everything that I can around the house. Our lot backs up to a walking path. Yesterday morning a guy was standing on our property, taking pictures of the fence.

I came out and he asked "who made this beautiful fence?" I said, "Um, me."

 

[sparky08]

I need some time to get a feeling of wealthy (or not).

We just retired 6 months ago. We're still living off the money in the checking account (money market). Once we start implementing our plan, I'll have a better feel.

In 10 years will be saying our net worth has doubled? Or will I be back to work?

 

[Rianne]

I need some time to get a feeling of wealthy (or not).

We just retired 6 months ago. We're still living off the money in the checking account (money market). Once we start implementing our plan, I'll have a better feel.

In 10 years will be saying our net worth has doubled? Or will I be back to work?

Feeling wealthy is more than your portfolio. It's feeling comfortable and confident you can have the lifestyle you worked so hard for and being physically healthy to enjoy it. I tried to gift this Barron's article, not sure it worked as it's behind a paywall.
https://www.barrons.com/advisor/articles/schwab-study-wealth-paradox-ed420782

"Consistently, respondents favored nonfinancial considerations, or factors that are hard to quantify. For instance, 70% said wealth is more about enjoying experiences than owning nice things. Respondents had the same split when asked whether wealth means not having to stress about money (70%) or having more money than most people they know (30%)."

"Sixty-nine percent of respondents said a healthy work-life balance is a greater driver of wealth than maximizing their earnings. Similarly, respondents said they would rather have a flexible work life than a higher salary, and more said it’s important to be generous with loved ones now than it is to leave an inheritance."

 

[thatguy]

At least I don't have to check my account balance before paying a bill.
I guess I'm at the bottom of the 90 percentile.
Pensions & SS cover our expenses as long as I don't buy a new car. Not sure I could afford a car payment. Maybe I could but I'd have to start being more careful with spending. Could pay cash for the car but it doesn't seem like smart use of savings.

 

[NoiseBoy]

I enjoy the debate about how to define when someone, or a household, is wealthy. Rather than thinking in terms of net worth, or XX percentile on a list, I've been trying to think of tangible measures of wealth. Since I like to travel, mainly to Europe, I thought I'd start by looking at the costs to travel in 1st class and then see if I could figure out what it costs to charter a private plane to Paris or Rome.

I started by using Google Flights in the Explore mode. My inputs were:

• Departure from Chicago (all airports)
  First Class
  Non-stop
  2 Week Trip in Next 6 months

The results were very disappointing. Using those inputs, I only have two possible destinations from Chicago to Europe; London ($5400) & Munich ($8400). Zooming out, I found a few more destinations including Tokyo, Dubai, and Honolulu, but that's about it for international travel. If I change the filter to include 1 stop, that opens things up quite a bit, but also introduces some pretty long total travel times. I think I'd prefer a direct flight in business over making a connection with a lay-over in first.

If I search for non-stop business class destinations I get a lot more results, especially in Europe. The prices to Europe are generally less than $4500, with a few places coming in near $3000. But, if I want to fly west instead of east, the costs go up a lot. Auckland and Hong Kong are over $9000 and Tokyo is more than $6000 for direct flights in business class.

So where does that leave me? Non-stop, first class flights to Europe seem to be of limited value since the flying time from O'Hare is generally less than 9 hours, so the market has reduced our options in favor of business class. Non-stop business class fares to Europe are <$4,500 which doesn't seem like a "wealthy" price to me. However, if I want to fly west in first class without stopping, that does cost a lot of benjamins. Roughly $22,000 to get to Tokyo or Dubai directly and that number does feel like "wealth" to me.

 

[jollystomper]

Since I like to travel, mainly to Europe, I thought I'd start by looking at the costs to travel in 1st class and then see if I could figure out what it costs to charter a private plane to Paris or Rome.

Did you factor in things such as, for overseas international flights, United's Polaris business class is actually their "first class"?

 

[NoiseBoy]

Did you factor in things such as, for overseas international flights, United's Polaris business class is actually their "first class"?

Well, I just used the 4 categories available in Google Flights: Economy, Premium Economy, Business, and First. However, I have observed that most of the planes that I've taken to Europe recently only have 3 classes now with business class being at the front of the plane. I have no direct experience with flying in business or first class, but it seems to me that today's business class seats are equal to or better than first class used to be.

I was trying to get a feel for the difference in flying commercial in the best class with flying privately, but it turns out that my commercial options are pretty limited if my criteria are first class + non-stop flights (from Chicago) so my premise appears to be flawed. Flying private, for whatever the cost, probably offers many more options than commercial first class direct flights from the Midwest.

 

[Koolau]

Well, I just used the 4 categories available in Google Flights: Economy, Premium Economy, Business, and First. However, I have observed that most of the planes that I've taken to Europe recently only have 3 classes now with business class being at the front of the plane. I have no direct experience with flying in business or first class, but it seems to me that today's business class seats are equal to or better than first class used to be.

I was trying to get a feel for the difference in flying commercial in the best class with flying privately, but it turns out that my commercial options are pretty limited if my criteria are first class + non-stop flights (from Chicago) so my premise appears to be flawed. Flying private, for whatever the cost, probably offers many more options than commercial first class direct flights from the Midwest.

Heh, heh, I still recall driving up to the executive terminal, bypassing the rigamarole. I handed my luggage to the 2nd officer standing in the cargo hold. I climbed into the plane, fastened my seat belt and off we went. Very nice.

I will say, there were no flight attendants and the food (while very good) was in a box in a fridge. YMMV

 

[F.I.R.E User]

You can be wealthy at $500k too if your expenses satisfy your lifestyle.

 

[kgtest]

I want to be able to cover all my living expenses with some to spare. If I can do all that, and splurge here and there on the finer things I enjoy in life, then to me...I am financially stress free. And from my reasoning this is as important to me as being filthy rich wealthy. As long as I continue to achieve and exceed my financial goals that I set for myself, I feel I am wise enough to live a comfortable "wealthy" lifestyle without having to worry about paying for day to day things.

 

[flyingaway]

Why do you need to be considered wealthy? If l can pay my bills, I am OK. I don't need people to think that I am wealthy.

 

[Koolau]

You can be wealthy at $500k too if your expenses satisfy your lifestyle.

That is true in the abstract. If all your income came from that $500K, then you might expect to be living on roughly $20K/year or about $1700/month. If you throw in rent, food, transportation, health care, misc., there wouldn't be much left at the end of the month. If one were happy with that lifestyle, then I agree that one could consider him/her self wealthy.

Heh, heh, such a person would not be debating here about 1st class vs coach travel to Europe.

 

[TheWizard]

Why do you need to be considered wealthy? If l can pay my bills, I am OK. I don't need people to think that I am wealthy.

People?
What do PEOPLE have to do with it?
It's a matter of whether YOU think you are wealthy, with income and assets that exceed your needs...

 

[Koolau]

People?
What do PEOPLE have to do with it?
It's a matter of whether YOU think you are wealthy, with income and assets that exceed your needs...

And whether you have enough to comfortably do the things you want to do in life. I come back to the concept of "enough" which has no number except for the one who decides he has enough.

I have no problem with checking out the percentiles and seeing where I fall. It's kinda interesting. I just don't put a lot of stock in it since I have, well, enough.

 

[Car-Guy]

And whether you have enough to comfortably do the things you want to do in life. I come back to the concept of "enough" which has no number except for the one who decides he has enough.

I have no problem with checking out the percentiles and seeing where I fall. It's kinda interesting. I just don't put a lot of stock in it since I have, well, enough.

Agree... What's wrong with that. It's not going to change anything nor hurt anything. So if you find it interesting, why not check it out. If you don't that's okay too.

 

[Koolau]

Agree... What's wrong with that.

Right. I know where I stand (pun intended) in height vs average American male. I know I'm over weight vs average. I know my age and expected life span. Lots of stuff we compare ourselves to others in our journey. Why not wealth? It can be harmless or it can become an obsession. For me it's harmless, so why not? YMMV

 

[audreyh1]

Well, I just used the 4 categories available in Google Flights: Economy, Premium Economy, Business, and First. However, I have observed that most of the planes that I've taken to Europe recently only have 3 classes now with business class being at the front of the plane. I have no direct experience with flying in business or first class, but it seems to me that today's business class seats are equal to or better than first class used to be.

That’s right. Business class overseas is first class for all practical purposes and quite luxurious and comfortable.

 

[COcheesehead]

Agree... What's wrong with that. It's not going to change anything nor hurt anything. So if you find it interesting, why not check it out. If you don't that's okay too.

It’s just for fun. If folks don’t find it fun, that’s fine too, don’t do it.