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-   -   Very small networth when ER ? (https://www.early-retirement.org/forums/f28/very-small-networth-when-er-84557.html)

braumeister 12-13-2016 05:10 PM

aaronc879 brings up the thought that I think the vast majority of us have:
Quote:

I'd retire tomorrow ... if I could afford it.
Still, this is such a new thing. My grandparents were able to retire, but their parents, born in the mid 19th century, had no such concept. Now some of us get to do it earlier, some later. Some of us can do it in more comfort, some less. but the fact that we can do it at all is just so remarkable that I don't have a lot of patience with those who complain about various aspects of it.

I think Wikipedia puts it rather well:
Quote:

In most countries, the idea of retirement is of recent origin, being introduced during the late 19th and early 20th centuries. Previously, low life expectancy and the absence of pension arrangements meant that most workers continued to work until death. Germany was the first country to introduce retirement, in 1889.[5]

Nowadays, most developed countries have systems to provide pensions on retirement in old age, which may be sponsored by employers and/or the state. In many poorer countries, support for the old is still mainly provided through the family. Today, retirement with a pension is considered a right of the worker in many societies, and hard ideological, social, cultural and political battles have been fought over whether this is a right. In many western countries this right is mentioned in national constitutions.

AlbaCrush 12-13-2016 05:39 PM

Quote:

Originally Posted by Meadbh (Post 1811512)
The answer to this question means nothing when pensions are not taken into account.

I just retired this year at age 50 with a Police Pension of $55,000 with COLA and a generous health and dental package. I have no debt. My house which is paid off is worth about $250,000. I have a modest 457 with $300K in it and another $60K in savings.

I'm not even close to having millions like others on here. Even though I don't have millions, I live comfortably and have taken several trips. The pension and health care package allows me to do this at an early age. :)

Walt34 12-13-2016 05:42 PM

Quote:

Originally Posted by braumeister (Post 1811665)
Still, this is such a new thing. My grandparents were able to retire, but their parents, born in the mid 19th century, had no such concept. Now some of us get to do it earlier, some later. Some of us can do it in more comfort, some less. but the fact that we can do it at all is just so remarkable that I don't have a lot of patience with those who complain about various aspects of it.

I also wonder if the retirement as we know it now (at least in the U.S.) will become a historical anomaly born of the economic expansion of the early and mid-20th century. (1930's excepted, of course.)

I got lucky and picked parents and time and location to be born into, and picked an occupation and employer that had a very good (and funded) pension plan. Frankly, I didn't give retirement much thought at all until my mid 30's and could have pulled the plug - with a heavy hit - as early as age 46. Outside the military and public safety positions that require relatively young and fit people I don't see that happening much anywhere.

From what I've read of psychology, money, and behavior it is a rare person who has the discipline and foresight to begin saving for retirement in their early 20's, let alone teens. I think the whole 401(k) system is going to be generally a disaster, with millions of people quickly exhausting what they've saved (if anything) and then relying on whatever SS evolves into. Several of my nephews are going to be some of them.

Still, it can be done so there is hope: https://www.early-retirement.org/foru...ars-72212.html

travelover 12-13-2016 05:49 PM

Quote:

Originally Posted by Walt34 (Post 1811678)
......... I think the whole 401(k) system is going to be generally a disaster, with millions of people quickly exhausting what they've saved (if anything) and then relying on whatever SS evolves into. ..........

I agree. The era of pensions will be a blip in history and it will go back to the way it was - multiple generations living in the same house or sharing with roommates.

braumeister 12-13-2016 05:50 PM

Quote:

Originally Posted by Walt34 (Post 1811678)
I also wonder if the retirement as we know it now (at least in the U.S.) will become a historical anomaly born of the economic expansion of the early and mid-20th century. (1930's excepted, of course.)

I think you may be right. You made a good (if risky) decision to go into law enforcement, just as I did in the military. Fortunately, we both avoided early death and were able to receive the promised retirement packages. But we're a tiny minority.

One thing is for sure: Fifty years from now things will be very different.

Enuff2Eat 12-13-2016 06:19 PM

Quote:

Originally Posted by Meadbh (Post 1811512)
The answer to this question means nothing when pensions are not taken into account.

Not everyone is fortunate enough to have a pension. Especially self employ people

Nemo2 12-13-2016 06:41 PM

Stopped working at the end of December 1988 aged 46 years and 3 months......had $500k Canadian, (no pension), and fixed income savings account rates were running up to 11 1/2% per annum.

Bought a spec house in B.C. with my late wife, did a huge amount of exterior (garden/landscaping) work ourselves, and paid for some interior additions.......sold it after eight years and cleared twice what we paid.

Currently have slightly over 370% of what I had when I stopped working, ( a couple hundred k of that came with DW).

With the standard Canadian government pensions, (similar to SS, plus DW qualifies for the age segment in 10 months), we do pretty well....a little travel once in a while...(sometimes twice in a while)..no complaints....(especially since I didn't start 'really' working until I was about thirty).

Oh, and our projected expenditure for 2016 is ~ $37,000 Canadian, ($28,000 US).

ChiliPepr 12-13-2016 06:49 PM

Quote:

Originally Posted by Enuff2Eat (Post 1811688)
Not everyone is fortunate enough to have a pension. Especially self employ people

I believe that is what Meadbh meant.... someone with a COLA pension of $60k with health insurance and $300k in an IRA is probably better off than someone with $1.5 million in the bank.

Enuff2Eat 12-13-2016 07:33 PM

Quote:

Originally Posted by ChiliPepr (Post 1811700)
I believe that is what Meadbh meant.... someone with a COLA pension of $60k with health insurance and $300k in an IRA is probably better off than someone with $1.5 million in the bank.

You made a lot of sense. My neighbor retired at 52... according to him. he has very little of saving except of his house is paid for and $51k/year pension. He probably feels alot more secure than a person with 1.5 million for sure. (he was a fireman).

he recently told that his wife retire too and they survive only his pension. Nice. :-)

Enuff2Eat 12-13-2016 07:35 PM

Quote:

Originally Posted by braumeister (Post 1811681)
I think you may be right. You made a good (if risky) decision to go into law enforcement, just as I did in the military. Fortunately, we both avoided early death and were able to receive the promised retirement packages. But we're a tiny minority.

One thing is for sure: Fifty years from now things will be very different.


In so many way, a guarantee nice pension is better than a large net worth.

NW-Bound 12-13-2016 07:52 PM

Quote:

Originally Posted by travelover (Post 1811679)
I agree. The era of pensions will be a blip in history and it will go back to the way it was - multiple generations living in the same house or sharing with roommates.

In order to live with the younger generations, you need to have offsprings.

Well, I guess a geezer can get adopted by a family. :) Else, roommates it is.

travelover 12-13-2016 07:55 PM

Quote:

Originally Posted by NW-Bound (Post 1811732)
In order to live with the younger generations, you need to have offsprings.

Well, I guess a geezer can get adopted by a family. :) Else, roommates it is.

When I was a kid, my elderly neighbor did this. He essentially gave a family his home as long as they cared for him until he died, which they did. They all lived together, then sold the house after he died.

Luck_Club 12-13-2016 08:03 PM

Quote:

Originally Posted by Enuff2Eat (Post 1811510)
less than or equal to $100k
less than or equal to $250k

less than or equal to $1/2 million
less than or equal to $600k
less than or equal to $750k
less than or equal to $800k
less than or equal to $1 million
less than or equal to $1.5 million
less than or equal to $2 million
more than $2million

enuff

I think everyone is hinting around it, but it still depends.


A person with a $2 million Net worth and no health care is most likely worse off than someone with $0 Net worth but has a $60K govt pension and healthcare coverage.

What is probably more pertinent is "What was your available Cash Flow, when you retired?" You could further parse that down to after tax, after Health care, after mortgage, etc. The cash flow number you need will vary, but should be slightly less than your working cash flow number. Especially since you won't be stashing away as much of your cash flow for later in life anymore. For many that can cut the cash flow requirement in half!:blush:

Cash Flow is king. If you have more coming in then going out no worries. Less input than output is a world of anxiety and depression.:frown:

NW-Bound 12-13-2016 08:03 PM

Quote:

Originally Posted by travelover (Post 1811733)
When I was a kid, my elderly neighbor did this. He essentially gave a family his home as long as they cared for him until he died, which they did. They all lived together, then sold the house after he died.

Did they have to care for him very long? ;)

FUEGO 12-13-2016 08:17 PM

Quote:

Originally Posted by Enuff2Eat (Post 1811724)
In so many way, a guarantee nice pension is better than a large net worth.

Yeah, I'd probably take that $55k per year police pension plus health/dental, few hundred thousand in the bank, and a paid off home. That would allow us to spend about $10-15k more than right now.

Though I kind of like watching my portfolio go up since it might allow higher spending in the future (it's going to take a while before we can spend $55k though!)

travelover 12-13-2016 09:04 PM

Quote:

Originally Posted by NW-Bound (Post 1811738)
Did they have to care for him very long? ;)



As I recall, it was about 10 years.

Sunset 12-13-2016 10:34 PM

Quote:

Originally Posted by Bir48die (Post 1811574)
Net worth is such an overused term. Should be investible assets plus some factor equated to you pension. Housing should be excluded unless you tapped it as a source of income. Instead of net worth it always comes back to income needed to cover said expenses and the various means to derive that income.

Even housing should be included when owned, as it saves the cost of rent minus the taxes, insurance, repairs.
So include the house "pseudo monthly income value" like a small pension.

I do like the idea of rather than net worth, to convert everything to yearly pension or income value a better comparison method.

Totoro 12-14-2016 07:08 AM

I'm in the sub-million camp, and consider myself FI. I have modest wants and am single. No pension, but socialized healthcare (Europe) and maybe a modest inheritance somewhere in the next 40 years.

Against better judgment (?) though I'm trying to build up my second company, mostly because I want to. So far it has only cost me money, and it will likely stay that way for a few more quarters. If that fails, I'm done with that and will optimize for independence further.

That would likely entail being an independent consulting for a few months a year. Or even join a startup (as employee).

Why do this? Because I like the intellectual challenge, want to find out if would enjoy building up a company, am nervous about the financial horizon (being mid thirties) and would like a slightly different lifestyle in the end which I currently cannot afford with worry: living on two continents. That would take somewhere north of 1.5 - 2 million (it includes a small airplane).

So a mix of ego, financial worry, lifestyle inflation and ambition ..

scrabbler1 12-14-2016 07:45 AM

Because I ERed at such a young age (45) 8 years ago, I needed to have a good chunk of my portfolio in non-retirement accounts so I could safely get from that age to age ~60 when the first of what I call "reinforcements" kicks in. Those reinforcements are unfettered access to my tIRA, my frozen company pension (only $1,200 a month, when I turn 65), and SS.


Before I ERed, I had about 2/3 of my $840k portfolio in pretax accounts and 1/3 in after-tax accounts, I had to reverse that ratio so I'd have enough to live on for 15 years until the reinforcements arrive. Half of that pretax portfolio (or 1/3 of the overall portfolio) was in company stock which I was able to liquidate relatively cheaply by using the NUA option to reduce the tax bite. Thanks to the crashing markets in late 2008, I was able to buy 25% more shares of a big bond fund at bargain-basement prices which has helped my monthly dividend income.


Despite pulling nearly $25k from the portfolio every year, it has still grown from $840k in late 2008 to $1.4M today.


I am just more than half way to getting to age ~60 intact since I ERed so things are looking good!

NW-Bound 12-14-2016 09:11 AM

Quote:

Originally Posted by travelover (Post 1811765)
As I recall, it was about 10 years.

I was making a facetious comment about the family having a conflict of interest with the man's longevity.

If honest people can be found, it would be a better deal than signing over one's assets to a nursing home. Still, it requires that one has some assets, and is not barehanded.


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